Lithium price embarks on a long boom

Going electric is getting pricier. Rising demand for electric vehicles (EVs) has propelled lithium carbonate prices in China up by 276% since the start of the year to $30,940 a tonne, report Zandi Shabalala and Pratima Desai for Reuters. The metal is a vital ingredient for the rechargeable batteries that go into phones and laptops, and roughly a third of the global output of lithium carbonate equivalent (LCE) is used to manufacture the lithium-ion batteries that power electric vehicles. 

Rising lithium prices alone will not sink the EV industry, says Al Root in Barron’s. At most they will add a few hundred dollars to the final retail price of a vehicle. Higher prices are needed to bring more supply online. A typical EV needs ten kilograms of lithium to power its 5,000 or so battery cells. To produce the 30 million vehicles annually that Elon Musk thinks the global industry is heading for will require “1.8 million tonnes of LCE… five times the size of the total lithium mining industry in 2019”.  

UBS analysts project that by 2030 we will need to produce 2,700 GWh of lithium-ion batteries annually to supply the EV industry, says Dan Runkevicius in Forbes. That is 13 times the amount of battery power we use now, or “225 billion iPhone 11 batteries”. Lithium is not rare, but setting up the mines needed to extract it from the earth’s crust takes time. The upshot? “Lithium producers might be in for a hell of a decade”.