Lithium prices are projected to stabilize in 2025 after experiencing a significant 86% drop over the past two years, according to analysts. The decline from the November 2022 peak has forced many global lithium mines to close, but as demand for electric vehicles (EVs) remains strong, particularly in China, analysts anticipate that this will help absorb the oversupply.
The global lithium glut, which reached nearly 150,000 tons of lithium carbonate equivalent (LCE) last year, is expected to shrink by half in 2025. This is attributed to a reduction in supply as a result of mine closures and China’s robust support for the EV market, where sales are bolstered by government incentives.
In July 2024, China doubled EV subsidies, leading to a surge in EV sales, which exceeded 5 million vehicles by mid-December. This boost in sales helped drive a temporary rally in lithium prices in late 2024, and analysts expect continued price support throughout 2025 due to ongoing subsidies.
Cameron Hughes, a battery markets analyst at CRU Group, stated that the market surplus is expected to decrease significantly, leading to price recovery. David Merriman, research director at Project Blue, anticipates prices will stabilize at around $11,092 per metric ton in 2025, while Chinese broker Guotai Juan predicts a price range of 60,000 to 90,000 yuan ($8,184 to $12,276).
Despite this optimism, analysts warned that any significant price increases could be limited by the ability to quickly ramp up production at many closed mines if the market proves profitable. Additionally, potential changes in U.S. policy, such as new tariffs on EV battery imports from China or a reduction in domestic EV incentives under the incoming Trump administration, could pose risks to future lithium demand.