The lithium market, after experiencing significant volatility with prices peaking during the electric vehicle (EV) boom and then falling due to oversupply, is now on the brink of a potential resurgence by 2025. This shift is attributed to the increasing demand for EVs and renewable energy storage solutions, which rely heavily on lithium-ion batteries. The price of lithium hydroxide, which reached $85,000 per metric ton in 2022, has since dropped to around $12,000 per metric ton, creating what some analysts see as a buying opportunity for long-term investors.
Government policies worldwide, such as the U.S. Inflation Reduction Act and the EU's planned ban on internal combustion engine vehicles by 2035, are expected to significantly boost EV sales. McKinsey predicts that by 2030, electric vehicles could account for up to 90% of passenger vehicle sales in major markets including the U.S., Europe, and China. This surge in EV adoption is a key driver behind the anticipated increase in lithium demand.
Beyond EVs, the expansion of renewable energy sources like solar and wind power necessitates efficient energy storage solutions, further bolstering the demand for lithium-ion batteries. McKinsey's Battery Insights team projects that global demand for these batteries will grow from 700 gigawatt-hours in 2022 to 4.7 terawatt-hours by 2030. Statista's long-term forecasts suggest that global lithium demand could exceed 2.4 million metric tons of lithium carbonate equivalent by 2030, doubling from 2025 levels.
Companies such as Atlas Lithium (NASDAQ: ATLX) are positioning themselves to benefit from this expected market recovery. Atlas Lithium is developing a major hard-rock lithium project in Minas Gerais, Brazil, and is set to introduce a modular dense media separation (DMS) lithium processing plant. This technology is noted for its efficiency in producing high-grade lithium concentrate and its reduced environmental impact, aligning with growing investor focus on ESG (Environmental, Social, and Governance) criteria.
The current downturn in lithium prices may thus represent a temporary phase, with the market poised for significant growth as demand outpaces supply in the coming years. This scenario presents both challenges and opportunities for stakeholders in the lithium sector, from miners to battery manufacturers, as they navigate the evolving landscape of global energy transition.
