The race to secure enough of the battery metal is just getting started
Among the commodities that are key to decarbonisation, lithium is in the driving seat. Dubbed “white gold”, the metal is needed to produce nearly all types of batteries powering electric vehicles (evs). A single pack typically includes ten kilograms of the stuff.
In the past two years turbocharged ev sales worldwide helped boost prices twelve-fold, prodding miners to invest, carmakers to sign supply deals and governments to label it a strategic material. Most commodity prices stalled this winter, but lithium continued to ride high.
The rally has since gone into reverse. Prices for Chinese lithium carbonate, one of the two main forms of refined lithium, have more than halved this year (see chart). One reason is slowing demand for evs in China, the biggest market for them. Another is that carmakers such as Ford and Volkswagen, eager to enter a race dominated by Tesla and Chinese rivals, signed battery-supply deals at high prices last year. They are now reviewing the terms, further dampening appetite.
Global supply of mined lithium is rising fast, meanwhile. After growing by 1% in 2022, to 575,000 tonnes, it could jump by nearly a fifth this year as big mines come online in Australia and Chile, says Tom Price of Liberum, an investment bank.
For the rest of this article: https://www.economist.com/business/2023/04/20/why-crashing-lithium-prices-will-not-make-electric-cars-cheaper