Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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• Lithium prices are not reflecting actual demand trends, with some experts warning of a potential correction due to oversupply concerns and high production costs.

• While EV adoption and battery storage are growing, they remain expensive for mass adoption, and the market may be underestimating the demand surge, particularly in energy storage.

• The International Energy Agency warns of potential lithium shortages as demand increases, while mining challenges and the long timeline for new production contribute to supply concerns.

Lithium prices are not reflecting real-world demand trends for the battery metals, which may at some point lead to a dramatic correction. Challenges remain, however, with EV adoption and with battery storage deployment, despite recent healthy growth in both. They are still not as affordable as they need to be for mass adoption.

Last year, it looked like the world was firmly in oversupply territory when it came to lithium. Even though China kept breaking records in EV sales that supported local lithium prices, globally, the situation was one of excess supply of the metal—and prices reflected that.

Now, warnings are beginning to surface about the immediate outlook for lithium demand, which may be underestimated. They come from lithium miners, which suggests some caution is advisable when weighing the factual content of such warnings, but they are nevertheless worth noting because one of the largest lithium miners in the world recently said lithium prices do not currently justify investment in more supply.

Albemarle, one of the top lithium producers globally, earlier this month reported it had returned to profit in the second quarter of the year after a loss-making three-month streak a year earlier. Cost cuts significantly helped that, because lithium prices were palpably lower in 2025 than they were last year, not to mention 2023: at $9 per kilogram of lithium carbonate equivalent, the prices of the metal for the second quarter of the year compared with $12-$15 per kilo of lithium carbonate equivalent in 2024 and $30 per kilo of carbonate equivalent in 2023.

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Albemarle does not seem to expect major changes in prices. One Canadian lithium miner, however, does. The chief executive of Patriot Battery Metals this week warned that lithium demand may take the market by surprise—by exceeding expectations.

“Nobody got solar application rates anywhere near right. Year-on-year, everybody was upgrading their outlook, and they still did not get it right. This is exactly what is happening in the battery world,” Ken Brinsden said at an industry event in Australia, as quoted by Mining Weekly. “There is a reasonable chance that in stationary energy storage, we are actually still accelerating. This market is going to be much bigger than the EV market,” the executive added.

Battery storage is indeed a vital part of the energy transition as envisioned by its architects, but there is a problem with battery storage, and this problem is financial. While costs have fallen significantly over the years, large-scale installations still cost quite a lot—and they need a lot of land on top of the land necessary for that solar Patriot Battery Metals’ Brinsden mentioned as an example.

Last year, lithium-ion battery pack costs fell by 20%, BloombergNEF reported earlier this year. The drop came on the back of a slowdown in EV sales and a battery-making overcapacity. The thing about overcapacity is that it will eventually get sorted out as excess producers leave the industry, which would likely lead to a rebound in battery prices. As for EVs, sales have rebounded this year in Europe as subsidies returned, which should be pretty bullish for lithium, but they are not about to rebound in the U.S., which is bearish news for lithium bulls.

Yet some already predict a shortage of lithium that would slow down the transition. Namely, the International Energy Agency recently warned lithium shortages may be on the horizon, both because demand is surging—per forecasts—and because most of the lithium mined today is located in parts of the world that have challenging climate that makes mining the metal hard. New mines, per the IEA, take 16 years to begin production, which adds to the supply anxiety.

By Irina Slav for Oilprice.com

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