In 2025, the lithium market is showing signs of recovery after a period of uncertainty. Lithium is key for electric vehicle (EV) batteries and consumer electronics. It is vital for the clean energy transition.
The global lithium market is shaped by factors like EV growth, supply changes, and geopolitical issues. Here’s a closer look at what to expect for lithium this year and the near future.
EV Sales Surge: Can Lithium Keep Up?
A major factor boosting lithium demand is the rise in sales of plug-in electric vehicles (PEVs). This includes both battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs).
In 2024, global PEV sales reached 16.5 million units, a 28.5% increase from the previous year, per S&P Global data. A significant portion of this growth came from China, which accounted for 86% of the global increase in PEV sales.
The US also played a role, contributing 5.9%, while the European Union experienced a slight decline in sales due to policy changes.
In particular, China’s EV market has been bolstered by competitive pricing, government incentives, and a growing variety of models. As more consumers switch to EVs, the demand for lithium, a key component in EV batteries, continues to rise.
Source: S&P Global Commodity InsightsThis shift is crucial for cutting global carbon emissions. Electric vehicles are a cleaner option than traditional internal combustion engine (ICE) vehicles.
Lithium Prices on a Rollercoaster
Lithium prices have been volatile, with a rebound seen in early 2025. The price of lithium carbonate, used in batteries, rose by 4.5% in January 2025. This increase came from higher demand for restocking before the Lunar New Year holidays. Maintenance at many lithium refineries has also added to supply issues.
Despite this, the overall outlook for lithium prices remains cautious. In the face of a growing supply surplus, prices are expected to stabilize between $10,000 and $11,300 per ton through 2029.
Supply growth may outpace demand for now, but market conditions could change by the decade’s end. A possible supply deficit might drive prices up.
The Lithium Power Struggle: US vs. China
Geopolitics plays a significant role in the lithium market. The US and China are competing for control in EV and battery tech. To protect their industries, both countries are imposing trade restrictions.
In January 2025, China suggested restricting lithium extraction and refining technologies. This step helps the world’s largest carbon emitter gain more control over the global lithium supply chain. This is important for lithium-iron-phosphate (LFP) batteries.
China’s soaring demand for electric vehicles (EVs) has fueled a sharp increase in its lithium reserves. It is the largest EV market in the world and so it needs a lot of lithium for batteries. This demand is pushing the country to speed up exploration and resource development.
China’s lithium reserves have nearly tripled, making the country the second-largest holder worldwide. Demand is set to increase by 2025. This expansion shows China’s drive for more self-reliance in the electric vehicle supply chain.
The US, in response, is focusing on strengthening its domestic mining and refining capabilities. US President Donald Trump’s “Unleashing American Energy” order seeks to simplify permits for mining. This change may boost lithium production in the country.
However, the process of developing new lithium mines in the US is slow. On average, it takes around 16 years for a mine to go from discovery to production. This long timeline could limit the US’s ability to meet its domestic demand for lithium in the short term.
Surprise Lithium Giants: Who’s Joining the Race?
New lithium producers are joining traditional ones like Australia and Chile. For example, Saudi Arabia is investing heavily in lithium projects.
In December 2024, Ma’aden, Saudi Arabia’s state-owned mining company, teamed up with the local startup Lithium Infinity. They will extract lithium from brine. This partnership helps Saudi Arabia diversify its economy and boost its role in the EV and battery markets.
This investment signals the growing global interest in securing reliable sources of lithium. Other countries want to boost their lithium production. Several African and European nations are making deals to develop lithium resources.
Challenges Ahead: Economic Uncertainty
The EV market is growing quickly, but the lithium industry faces challenges. Economic issues like inflation and changing government policies may lower consumer spending and demand for lithium.
For instance, in the US, President Trump’s policies might slow EV adoption by reversing climate goals. If the federal government cuts the $7,500 tax credit for EV buyers, electric vehicles may become more expensive. This change could hurt lithium demand.
In Europe, the situation is equally uncertain. The upcoming election in Germany could influence the future of the EV market.
Germany plays a key role in Europe’s car industry. The election results could impact its push for electric mobility. The uncertainty around policy shifts in key markets like the US and Germany could result in fluctuating demand for lithium.
Lithium’s Next Chapter: Boom or Bust?
Looking ahead, S&P Global expects that the lithium market will face a surplus in 2025, as supply growth continues to outpace demand. However, the situation could change in the latter part of the decade, with a potential supply deficit driving prices higher. 
This outlook assumes global EV sales will keep growing. It also expects strong lithium demand as more countries commit to cutting carbon emissions.
In 2025, the lithium market is navigating a period of uncertainty and opportunity. Prices should stabilize soon, but the long-term outlook looks bright. Strong demand from the electric vehicle industry drives this positivity. As companies and countries work to tackle climate-related issues, lithium becomes vital for the clean energy shift.
