As the uptake of battery electric vehicles (BEVs) increases, lithium prices are set to follow suit, with hopes the battery metal can shake free of its slump in 2025.
McKinsey projects a six-fold increase in global BEV demand from 2021 to 2030, with annual unit sales expected to climb to approximately 40 million by the decade’s end.
In 2023, China cemented its status as the e-mobility leader, with one in four cars sold being a BEV.
This growth is underpinned by several factors, including China’s integrated value chain, which provides its EV manufacturers seamless access to critical materials like lithium.
Local EV companies, benefiting from robust domestic demand, are also targeting export markets, which could further amplify the need for battery metals.
Despite a global slowdown in BEV growth in 2023 due to macroeconomic challenges and reduced subsidies in Europe, China’s robust position highlights its potential to sustain high lithium demand.
BMI predicts a notable recovery in lithium prices following a challenging year. Lithium carbonate prices, which traded at $US10,766 per tonne as of November 27 2024, are forecasted to climb to $US20,000 per tonne in 2025.
This represents a 29 per cent rise from the projected 2024 average of $US15,500 per tonne, meaning lithium could be one of the fastest-growing commodities this year.
The anticipated price recovery reflects a shift in market dynamics. While lithium was weighed down by a supply–demand imbalance in 2023, the growing push for EVs, particularly in China, is set to rebalance the market.
Governments and manufacturers are increasingly focused on scaling up BEV adoption, driven by decarbonisation goals, which will likely translate to higher demand for lithium batteries.
However, supply challenges loom. Although new lithium extraction projects have been announced, the gap between demand growth and supply expansion could persist, pushing prices higher.
Europe’s reduced BEV subsidies and global economic uncertainties may temper lithium price growth, but China’s strong EV ecosystem and rising global sales indicate a bullish medium-term outlook.
With lithium prices predicted to rise by nearly 29 per cent in 2025, stakeholders across the EV value chain will need to closely monitor supply chain constraints and regional demand shifts to navigate this dynamic landscape effectively.
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