Recent declines in lithium prices have created potential entry points for long-term investors. As a critical material for batteries, lithium prices have been significantly impacted by slowing growth in the electric vehicle (EV) market. In China—the world’s largest EV market and a dominant player in the lithium supply chain—battery-grade lithium carbonate prices hit a four-year low in April 2024, continuing a downward trend from record highs in 2022.
Lithium prices surged in 2022 amid expectations of an EV boom but have since retreated as demand cooled and battery overcapacity emerged. Mark LaVerghetta, co-founder of U.S.-based ReElement Technologies, notes that weaker consumer demand for EVs over the past year has reduced lithium battery orders, while global lithium supply growth has outpaced battery gigafactory expansion. Jason Barnard, CEO of Canada’s Foremost Clean Energy, adds that new lithium projects in Argentina and Australia have further boosted short-term supply.
Despite current headwinds, industry experts maintain confidence in lithium’s long-term value. Julia Khandoshko, CEO of Mind Money, emphasizes that EV adoption is irreversible, calling recent price declines a “temporary dip.” Angelo DeCandia, a business professor at Touro University, cautions that sector recovery will take time but suggests the current downturn may offer a window for long-term investors. Ryan Melsert, CEO of American Battery Technology, highlights accelerated U.S. lithium battery factory construction as a demand driver, underscoring the metal’s role in the global energy transition.
Experts caution that lithium’s inherent volatility demands patience, urging investors to focus on long-term energy transition trends. While current valuations may offer strategic entry points for risk-tolerant, long-term portfolios, short-term gains appear limited.
