Electric Vehicle Transition Accelerates... Lithium Prices Surge 240% This Year

Lithium Price Index Soars to 412.5
Highest in 5 Years

[Asia Economy Reporter Kwon Jae-hee] As the automotive industry, led by Tesla, accelerates its shift to electric vehicles, the price of lithium, a key material for electric vehicle batteries, is soaring to unprecedented heights. Lithium is not only essential for electric vehicle batteries but also a major raw material for rechargeable batteries in smartphones and other devices. As competition among companies to secure lithium intensifies, concerns are rising about a long-term supply shortage.

On the 13th (local time), the Wall Street Journal (WSJ), citing research firm Benchmark Mineral Intelligence, reported that lithium prices have surged by 240% just this year. The lithium price index, which was 121.5 last year, skyrocketed to 412.5 by the end of last month. This is the highest level in the past five years.

The rise in lithium prices is due to supply failing to keep up with demand. While automakers including Tesla are increasing electric vehicle sales, causing a surge in demand, supply is limited due to bottlenecks in the supply chain. Additionally, lithium prices had been low in recent years, and the COVID-19 pandemic further reduced new investments, leading to supply shortages.

WSJ pointed out, "Lithium mining often experiences imbalances between supply and demand because it requires significant time and initial investment costs due to environmental destruction concerns, local opposition, and complicated permitting processes."

In fact, Rio Tinto, a global mining company headquartered in Australia, planned to invest $200 million (about 2.37 trillion KRW) in lithium production in Serbia, but faced setbacks as thousands of local residents protested against the government's mining approval.

According to BloombergNEF, the average price of lithium-ion batteries is expected to rise for the first time in the past decade. Although raw materials account for a small portion of the total electric vehicle price, the increase in the average price of lithium-ion battery packs could contribute to this. WSJ analyzed that in recent years, electric vehicle companies have gained an advantage over internal combustion engine vehicles thanks to low battery prices.

Accordingly, global lithium battery technology ETFs have risen more than 40% just this year.

However, experts predict that as investments in lithium production increase, supply will grow and lithium prices will stabilize.

Koch Industries, led by American billionaire Charles Koch, recently invested $100 million (about 118.5 billion KRW) in Standard Lithium, which is establishing a lithium production plant in Arkansas, USA, in partnership with a German company. Koch is also known to have invested in battery supply chain startups.

Additionally, last month, lithium mining startup Lithium Americas acquired a lithium mining company in Argentina for $400 million (about 474 billion KRW), surpassing Chinese battery maker CATL.

Citigroup forecasts that the current lithium supply shortage will continue at least until next year, but by 2025, lithium supply is expected to exceed demand.

This content was produced with the assistance of AI translation services.