Lithium price is diving as EV metals battle a double whammy

March 24, 2023 01:45 AM PDT | By Invezz

Lithium price is diving as EV metals battle a double whammy — Image source: Invezz

Demand and supply concerns

Lithium and nickel should be doing well as the world continues to embrace electric vehicles. However, the situation is not doing well. As I wrote in this article on Wednesday, nickel prices have continued to nosedive.

There are two main reasons why lithium prices are crashing. First, there is the ongoing fear that the industry is now getting oversupplied following several years of investments. Countries like Chile, Australia, and Argentina have ramped up production to meet the rising demand.

At the same time, as I wrote in the article on Zimbabwe dollar, the country has seen its lithium stockpiles jump to more than 2 million. This jump happened after the country announced a ban of lithium ore exports in a bid to incentivize local companies. As such, there are fears that this ore will come to the market soon. In a note, an analyst said:

“Supply is coming on stream faster than you can say ‘boo’. Demand remains strong, but prices have been unsustainable for some time now.”

Lithium demand easing

The other key issue is that EV demand seems to be easing. For example, companies like Tesla and Nio have been forced to slash prices several times. The first rule in economics is that companies never lower prices in a period of elevated demand. In a note, an analyst told Bloomberg that:

“Lithium carbonate prices saw a greater rate of decline as greater supply growth outlook for the year coincides with weaker demand sentiment.”

Worse, many EV companies are not doing well either. On Thursday, Ford said that its EV business lost over $3 billion in 2022. Rivian, the fast-growing EV company, lost over $6 billion during the year while Lucid lost over $2.6 billion

The post Lithium price is diving as EV metals battle a double whammy appeared first on Invezz

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