Lithium prices have officially hit the stratosphere, rocketing by 478.3% between January 2021 and January 2022.
That’s according to figures from Benchmark Mineral Intelligence (BMI), which tracked the price of raw material spodumene, from which lithium is extracted.
Lithium is a key component of the lithium-ion batteries in electric vehicles. The average EV battery has 10kg of lithium, with a ton of lithium enough for around ninety vehicles.
Most industry experts expected lithium prices to increase, but the trajectory of the increase has been sharper than anticipated.
The increase will naturally make it more expensive to manufacture EV batteries, although this does not necessarily mean higher battery prices, because there are many components in the supply chain.
In November Last year, we talked to an industry insider at a leading car manufacturer, who revealed EV makers are hoarding materials.
“We are seeing most EV makers hoarding quantities of raw materials and allocating them to battery manufacturers,” says our source.
“Materials like nickel and cobalt are in short supply, but it’s lithium that has people alert. Mines take seven years to develop on average and the current mines don’t produce enough lithium to make supply meet demand in 2022.”
When will lithium prices go down? When supply starts meeting demand. New mines are being built, with mining capacity expected to triple by 2025. However, the short term indicators suggest further increases lie ahead, especially as EV demand grows.