Prices for lithium went from $17,000/ton in 2021 to $78,032/ton in 2022
This will make electric vehicles more expensive, thus less popular
This situation is caused by the slump in demand in 2020, which led to a lack of production
Electric vehicles have always commanded a substantial premium over comparable gasoline powered vehicles and this situation is not over quite yet.
Over the last ten years, the increasing demand for electric vehicles has made the need for lithium skyrocket but the mining industry has not kept up to the required level.
Indeed, lithium, which is the main component in the batteries of most electric vehicles on the road, was selling for about $4,450 per ton in the US back in 2012.
With the exception of a small drop in 2014, this price steadily increased to $14,660 per ton in 2018. In 2019, the market experienced a slump which lowered the price back down to $11,310 per ton. Then the next year, the pandemic happened.
In 2020, the effects of the pandemic almost froze the economy and the demand for lithium fell so low that the price decreased down to just $6,800 per ton, a level that hadn’t been seen for 5 years.
The problem with this is that when the demand for a product is low, compagnies don’t invest in its production. This is what led to the current situation, since mining compagnies were not ready for the strong demand for electric vehicles that resumed in 2021.
This made the prices surge to $17,000 per ton and this year, the situation is even worse since the production of lithium hasn’t significantly increased over last year, but sales of electric vehicles are in a constant increase.
As of yet in 2022, lithium prices have gone through the roof and reached a record high of $78,032 per ton, which is about 500% more expensive than a year ago.
Experts believe that this could add around $1,000 to the MSRP of EVs in the United States and the price for the mineral is not expected to go back to its previous level for at least a couple of years while suppliers are gearing up to face the strong demand.
Since price is one of the factors that limit the adoption of EVs, many buyers will have to wait before they can afford to make the shift to electric.