Lithium prices have tripled over the last year
This is due to the increase in sales of EVs, especially in China
The lithium producers are still struggling to increase their output
The price of lithium has hit a new record today, with the ton costing $71,315 in China, which is about three times as much as it was a year ago.
This massive increase is apparently due to the combination of two factors. Indeed, electric vehicles are getting more and more popular while lithium producers are faced with production constraints.
Both of these elements are even more true in China since the country is home to the largest automotive market in the world as well as all of the major lithium producers.
According to the China Passenger Car Association, there could be as many as 6 million electric vehicles sold in China this year, which is almost twice as many as were sold in 2021.
This means that the demand in lithium, the key element in EV batteries, is exploding at the moment, with automakers buying all of the lithium they can get their hands on.
At the same time, companies that mine and refine lithium are operating at their maximum capacity and many of them are trying to expand their capacity by opening new mines and facilities.
To make matters worse, frequent electricity cuts affected the Sichuan province, where one-fifth of China’s production of lithium takes place, for two weeks in August, further reducing the supply of the mineral.
Following the laws of supply and demand, the price of lithium is skyrocketing and establishing new records.
The government of China is said to have held a meeting with lithium producers in order to stabilize the price of the resource and discourage collusion between the larger companies.
Of course, this large price increase is passed on to buyers of electric vehicles, which are still much more expensive than comparable vehicles powered by gasoline or diesel.