After navigating the turbulence of 2024, the global lithium industry enters 2025 facing new challenges and opportunities. Lithium carbonate prices plunged by 22% last year due to a global supply glut. However, analysts believe the market could gradually regain balance. According to S&P Global, supply surplus in the lithium market is projected to shrink significantly in 2025 to 33,000 metric tons, compared to 84,000 metric tons in 2024, as production cuts begin to take effect.
Demand for electric vehicles (EVs) remains the primary driver of the lithium market, with China maintaining its dominant role after recording record-breaking sales. However, geopolitical risks, including U.S. and Canadian tariffs on Chinese EVs, are set to reshape global supply chains.
Over the past two years, lithium prices have suffered an 80% decline. However, some analysts suggest that the market has bottomed out and could rebound. With lithium spot prices rising 7% at the end of 2024, this serves as a positive signal for a recovery in 2025. If the market witnesses strong momentum this year, it may benefit not only producers impacted by lower prices but also exploration companies with solid fundamentals.
For medium- to long-term investors, this period could present an ideal opportunity to re-enter the market based on projected recovery trends.
The potential rebound of lithium prices in 2025 largely hinges on the success of production cuts. According to William Adams, Head of Base Metals Research at Fastmarkets, output reductions have already begun in China and elsewhere. However, further cuts might be necessary if prices remain low. That said, some producers are still forging ahead with expansion plans, and new mines and increased capacity coming online could keep the market oversupplied in the short term.
Even with reductions, lithium demand is expected to align with production by late 2025. However, prices are unlikely to return to the record highs seen in 2022. The presence of more producers and significant inventory levels, especially in China, could cap price gains. Benchmark Mineral Intelligence analysts share a similar outlook, noting that emerging supply from regions such as Zimbabwe and Mali will contribute to global output in 2025.
Geopolitical developments will continue to have significant implications for the lithium industry in 2025. For instance, the U.S. and Canada have imposed 100% tariffs on Chinese EVs, further escalating trade disputes. Experts caution that engaging in a tit-for-tat trade war with China could have severe consequences due to China’s dominance in commodity supply chains.
At the same time, “resource nationalism” is intensifying worldwide. Countries increasingly view lithium as a strategic resource. For instance, Chile is moving toward partial nationalization of its lithium producers, while Zimbabwe has already banned the export of lithium ores. Additionally, South Korea has strengthened its lithium processing capacity, and Tesla’s new lithium refinery in Texas is also a key development to watch. If the U.S. under the Trump administration implements new tariffs, it could accelerate domestic lithium development.
Despite geopolitical and supply chain disruptions, the core driver of the lithium industry remains increasing demand from electric vehicles (EVs) and energy storage systems (ESS). Together, they account for approximately 80% of lithium consumption. According to Benchmark, lithium demand from these two sectors is projected to grow by more than 30% year-on-year in 2025.
While EV sales in Europe and North America softened in 2024 due to policy shifts, Fastmarkets projects a recovery in 2025. Meanwhile, lithium demand remains robust in countries like China and India, where renewable energy expansion is boosting demand for lithium-based storage systems. Lower lithium prices have reduced the overall cost of lithium-ion batteries, creating pricing advantages for more storage projects.
2025 promises to be a year filled with uncertainty for the lithium market, but also one rich with opportunities. As supply and demand gradually approach balance, some experts predict lithium spot prices could rebound by 100% to 150%. Whether through supply-demand optimization or the influence of national policies, the global lithium industry is poised for further transformation.
“Policy will play a critical role in 2025,” summarized Benchmark’s Adam Megginson, adding, “especially the potential tariffs by the Trump administration, which could significantly reshape the global lithium landscape.”
