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”.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Investors will reap long-term rewards from UK equitiesOpinion Nick Train, portfolio manager, Finsbury Growth & Income Trust, highlights three UK equities where he’d put his money
-
The graphene revolution is progressing slowly but surelyEnthusiasts thought the discovery that graphene, a form of carbon, could be extracted from graphite would change the world. They might've been early, not wrong.
-
'Investors will reap long-term rewards from being bullish on UK equities'
Opinion Nick Train, portfolio manager, Finsbury Growth & Income Trust, highlights three UK equities where he’d put his money
-
The graphene revolution is progressing slowly but surely – how to invest
Enthusiasts thought the discovery that graphene, a form of carbon, could be extracted from graphite would change the world. They might've been early, not wrong.
-
A strong year for dividend hero Murray International – can it continue its winning streak?Murray International has been the best-performing global equity trust over the past 12 months, says Max King
-
The shape of yields to comeCentral banks are likely to buy up short-term bonds to keep debt costs down for governments
-
The sad decline of investment clubs – and what comes nextOpinion Financial regulation and rising costs are killing off investment clubs that once used to be an enjoyable hobby, says David Prosser
-
How to profit from the UK leisure sector in 2026The UK leisure sector had a straitened few years but now have cash in the bank and are ready to splurge. The sector is best placed to profit
-
Who won the streaming wars?The battle of the TV and film streaming giants for dominance looks to be entering a final phase. The likely winner may surprise you, says Simon Wilson
-
'Investors should expect a good year for equities'Opinion The economy is positive, and investors are still cautious, says Max King
