The recent decline in the price of lithium stocks has investors confused. Because lithium is used in batteries for electric vehicles and the storage of renewable energy, it is very important. The reduction in price may result from adjustments to the production capacity of lithium companies, study of new lithium-producing locations, or adjustments to the global economy that impact the demand for electric vehicles.

Looking ahead to 2024 and 2025, experts think the future for lithium looks good. More and more countries want to cut down on pollution by using electric cars. This means they’ll need more batteries with lithium inside.

However, the cost of lithium stocks is currently fluctuating greatly. This shows that stock buyers are unsure of what will occur next. Considerations for investors should include new battery technology, policies supporting electric vehicles, and innovative methods of extracting and utilising lithium.

In summary, the market for lithium appears to have a bright future as more people try to use cleaner energy sources, even with the current uncertainty surrounding lithium stocks.

Also Read: Will Electric Vehicles Help To Reduce Our Carbon Footprint?

The price of lithium has dropped a lot.

The price of lithium has dropped a lot because fewer electric cars are being sold in China and their economy is slowing down. When demand for lithium goes down and there’s more supply available, prices naturally decrease.

In China, specifically, the price of lithium carbonate was very high at $81,360 per tonne in November 2022. Now, it has fallen dramatically to $20,782 per tonne, the lowest in two years. That’s a huge 67% drop compared to last year.

To deal with these lower prices, Chinese companies that refine lithium are either making less or stopping production altogether.

Overall, experts think the big reasons for this sharp drop in lithium prices are a combination of factors that are causing problems in the market.

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What Makes Lithium Price Volatile?

Lithium prices can change a lot in the short term because of different reasons.

Lithium is not produced in huge amounts, so any problems with making it can affect the price. Changes in what people want to buy, like more electric cars or gadgets, can quickly change how much lithium is needed.

The market for lithium is also affected by politics and rules, which can change how much people want to buy. New ways to get lithium out of the ground can also change how much there is and how much it costs.

Big oil and gas companies are also starting to get interested in lithium. For example, Exxon and Chevron have said they are looking into it. Another big private energy company, Lowry, is also thinking about investing in lithium to help with global energy changes.

In the past, China has mostly controlled where lithium comes from, especially from Australia. But more companies in Europe and North America are starting to get involved, which might change things.

Canada is also trying to get more involved in making lithium for North America. One small Canadian company, Li-FT Power (LIFT: LIFFF), is focusing on finding and developing new places in Canada where lithium can be found.

They want to explore and build new lithium projects in places where we already know there’s lithium.

Also Read: What’s The Carbon Footprint Of Biofuels?

Fueled by Lithium: How Electric Vehicles Are Changing Things Up

Investing in securing lithium supplies for the future is rapidly increasing. Major automakers and lithium producers contributed more than $1 billion towards this goal in 2023.

To make sure they have enough lithium, for example, General Motors invested $650 million in Lithium Americas. Albemarle also invested $110 million in Patriot Battery Metals, showing the industry’s commitment to maintaining sufficient battery production.

It is expected that companies will continue to invest more money in order to guarantee they have the materials necessary to produce batteries. While the market for electric cars is still small, it has a lot of space to grow. The demand for lithium will rise as more people drive electric vehicles. For this reason, it’s important that businesses continue to invest and form partnerships in order to satisfy this rising demand.

Challenges we’re dealing with now and how things might look in the future

Lithium appears to have a bright future, despite some short-term ups and downs. Lithium plays an essential part in the fight against carbon emissions, particularly in the production of electric vehicles (EVs).

The world may require far more lithium carbonate than we do at the moment—more than 2.4 million metric tons—by 2030. According to BloombergNEF, the need for lithium could increase five times by the end of the 2020s, mostly due to the growing demand for EV batteries.

As of right now, Goldman Sachs has low expectations for the price of lithium in 2024. They believe that because there is an excess of supply relative to demand, prices may continue to decline.

Demand would exceed supply once more by 2024, as stated by Goldman Sachs. However, they now believe that it may take longer, possibly until 2025. Goldman Sachs believes that lithium prices will remain low as a result. For the upcoming year, they have lowered their price targets for lithium varieties such as lithium hydroxide and carbonate.

According to S&P Global, another expert, since there won’t be as much excess lithium available after 2025, prices for lithium should start to maintain. They believe that after that, prices will rise once more.

Overall, even with current difficulties, there should be a significant demand for lithium due to the goal of having zero net carbon emissions by 2050. With the increasing use of electric vehicles and global efforts to reduce carbon pollution, lithium appears to have a bright future.