- Shares of Pilbara Minerals (ASX:PLS) have ballooned more than 16% in the last five trading days.
- Lithium miners across the globe are capitalising on the burgeoning demand for electric vehicles.
- Lithium is an important element used in the manufacturing of new age lithium-ion batteries.
Shares of ASX-listed lithium player Pilbara Minerals Limited (ASX:PLS) have surged more than 16% in the last five days to reach an all-time-high level of AU$2.4 a share on 11 August 2021 at 11:51 AM AEST. The shares have recorded a terrific gain of 528.15% in the last 52-weeks.
Lithium miners across the globe have been capitalising on the skyrocketing demand for lithium. Increased penetration of electric vehicles (EV) and a surge in renewable energy storage batteries across the globe has given wings to lithium stocks. In line with the long-term goal to become carbon neutral by 2050, the Biden administration is anticipated to increase the fuel-efficiency standards and average miles per gallon to 52 by 2026.
Related Article: Why Pilbara Minerals (ASX:PLS) shares shot up 20% in 2021
Source: © Malpetr | Megapixl.com
Notably, lithium is one of the primary components used in the manufacturing of Lithium-ion batteries (LIB), which are the new-age batteries offering higher strength and lesser charging time than conventional batteries.
On that note, let’s have a look at possible drivers of Pilbara Minerals’ share price movement.
Government support and subsidies
Extraordinary spike in lithium prices is one of the major drivers triggering exemplary growth in PLS shares. The rapid surge in the demand for EVs has bolstered the lithium demand. The record-breaking sales of EVs in the last few years are directly attributed to the strong government support in form of economic recovery plans to bet heavily on the EV industry, transforming the transportation sector. The European government has agreed to provide high subsidies to EV buyers.
Source: Copyright © 2021 Kalkine Media
China, at the same time, has invested more than US$60 billion to boost its EV industry with an aim to transition to all-electric fleet by 2035. Also, US President Joe Biden recently pledged to build half a million charging stations and made commitments to make half of the country's auto fleet electric by 2030.
The imbalance in supply and demand for lithium is also increasing, providing a room for supply deficit in 2021.
Lithium Prices – a key catalyst
Despite the volatility driven by coronavirus to almost every market in 2020, lithium has shown a tremendous performance, with its prices witnessing uptrend during the first half of 2021. Lithium prices surged at a surprising pace in the first quarter of 2021 on the back of rising demand from the EV sector. Following the promising start, the prices continued to follow a similar trend in the second quarter of the year too.
The prices of lithium carbonate, one of the main components for lithium-ion batteries, have almost doubled in August when compared to the levels last seen in January 2021. The silver-white light metal is currently trading at CNY92,500 per tonne, the highest since August 2018.