Lithium prices are going to drop in 2023 after suffering record-high prices this year—providing a booster for the cost of EV-battery production.
- As demand for electric vehicles (EVs) has risen worldwide, so has the demand for lithium—the key component of the batteries powering the cars—and after a long high, the price looks to be coming down.
- Chairman of Sinomine Resource Group Co. Wang Pingwei says more lithium supply is emerging signaling a cool-down in price for 2023.
- Wang predicts the price of lithium to drop to around a quarter of the current level, which will help EV manufacturers leave the lithium market with good profits.
Why it’s important
Demand for EVs has skyrocketed worldwide as many opt for environmentally friendly battery-operated cars.
As demand for the vehicles continues to rise, so does the demand for lithium, which is one of the main ingredients needed to create rechargeable EV batteries. The high demand for this hot commodity has sent prices soaring and making it harder for automakers to get the product, but it looks like the prices could officially be slowing down.
Many lithium mining companies are seeing a surplus in supply, which will lead to a drop in prices for 2023, bringing relief to many EV car manufacturers.
“Over the next six months, demand softness is likely to dominate the lithium price discussions as demand in China is challenged by zeroing subsidies and surging Covid-19 cases,” says analyst at S&P Global Commodity Insights, Alice Yu. “Consumers in the West face growing affordability issues.”
The high price of lithium resulted in high battery prices for EVs, making them out of reach for many consumers, just as the U.S. is pushing for more EV turnover. Lithium prices could potentially see a significant drop, so it could help lower EV prices in the future.
Sinomine’s Wang said he sees lithium carbonate prices dropping to about 400,000 yuan ($57,443) a ton in 2023 after reaching a high of 600,000 yuan in November, signaling a big drop in price.