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White gold no longer glitters like it once did. The price of lithium, the metal used in batteries, is literally plummeting, driven by a glut in production and slowing (albeit relative) demand. Lithium carbonate, in particular, is trading below $13,000 a tonne, with lithium hydroxide approaching $12,000: levels they haven’t fallen to since July 2021, nearly three years ago.
After the rebound between March and April quickly exhausted, the decline in the past 12 months is now more than 70%, and today many analysts believe that the fall in prices will continue, at least in the second half of this year, if not longer: a trend that is in some ways encouraging, as it reduces the cost of raw materials necessary for the energy transition.
However, one of the reasons behind the collapse is growing pessimism about the pace of decarbonization, especially about the adoption of electric vehicles, which has disappointed the exaggerated forecasts that have been circulating, especially in Europe and the United States recently. Many Western automakers are scaling back production development plans and battery supply deals. In the case of BMW, only Cancelled mobile order Northvolt is valued at $2 billion.
Macquarie observed that global pure electric vehicle sales grew 10.6% in the first four months of the year: “Continued year-on-year growth, but a clear slowdown from the 26.9% growth rate in 2023.” Accelerating hybrid registrations.
Moreover, around 90% of the growth in “pure” electric vehicles is taking place in China: a country where “the market is now maturing, with penetration in large cities reaching 67.9% in 2023 and a national average of 35.7%”. Hence: new registrations in China will also slow growth for Macquarie, which forecasts 24.6% growth (vs. 30.2% in 2023).
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