Lithium prices are down almost 70% since a peak in November, depressing shares of a number of mining companies, but many analysts and industry veterans say a shortfall of the metal will soon drive a new surge in prices.
The Biden administration on Wednesday announced a plan to significantly accelerate the creation of a U.S. electric vehicle industry. But where lithium prices go from here—and whether there is enough of the metal to go around—will help determine the success of the auto industry’s transition from a combustion era to an electric vehicle one. Batteries are the costliest component in an EV, and lithium is one of the most expensive battery metals. A two-year, fourteenfold surge in lithium prices helped push up EV prices to an average of $64,000 a vehicle in the U.S. late last year, too much for most buyers to afford. But the steep drop of lithium prices raised hopes that EV prices would ease once the cheaper lithium worked its way through the supply chain.
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