Also in 2025 and for the third consecutive year, the lithium it seems destined not to shine. The oversupply on the market still appears far from being resolved and the price of the metal, essential for the production of any type of battery, has dropped by 90% compared to the historic highs at the end of 2022, when it reached 85 dollars per kilo (in the case of hydroxide), after a rally that had multiplied its value seven times.
Lithium plants are closing
While a dozen plants have been closed or have postponed the start of activitiesmany others continue to operate unabated, even accepting to accumulate losses in order not to stop. In the meantime, demand, although not as weak as it might appear from the European context, is unable to keep up the pace necessary to rebalance the market. The crisis of the electric car, and more generally of the automotive sector, is becoming increasingly worrying in Europe and the effort to develop a local battery industry has encountered numerous difficulties, as demonstrated by the case of the Swedish Northvolt, recently put into administration controlled.
However, global EV sales continue to grow, with November seeing another record-breaking month, with 1.8 million new registrations, according to data from Rho Motion. For the first 11 months of 2025, an increase of 25% is expected, bringing the total to 15.2 million units.
The main problem lies in the fact that both supply and demand for lithium, as for many other raw materials, are increasingly influenced by China. This dynamic alters the market balance, postponing the rebalancing of fundamentals and generating effects that are felt globally.
But the collapse of lithium causes the price of electric batteries to drop
Not all the effects are negative: according to Bloomberg, the cost of battery packs for electric vehicles has dropped by 20% in 2025setting a record high since 2017, and has stabilized at an all-time low of $115 per kilowatt hour. By 2026, it is expected to finally fall below $100/kWh, the threshold that makes electric cars competitive with combustion engine ones. However, it is important to note that 92% of the battery market is currently dominated by China, according to Bloomberg.
Furthermore, two thirds of global sales of electric vehicles were concentrated in the People’s Republic (9.7 million units, an increase of 40%). Furthermore, Beijing controls significant shares of the supply chain for all metals used in batteries. Furthermore, Chinese producers are among the least inclined to reduce production: a particularly relevant factor in the case of lithium.
Chinese mines and refineries are often part of large integrated groups, which also produce cathodes, batteries or even complete vehicles, which allows them to better compensate for losses than other market players.
The supply will start to grow again
In the short term, it seems unlikely that lithium prices will recover quickly; at most, their descent could slow down. A sign of this comes from the ongoing negotiations between producers and consumers for the 2025 supply contracts: according to Bloomberg sources, discounts of between 0% and 2% are being negotiated compared to spot price indices, in stark contrast to the discounts of 5-10% expected for 2024 contracts.
Forecasts agree that the excess supply is slowly reducing, but that it will not rebalance in the short term. According to the Cru, the closure of mines will lead to a production cut of 100 thousand tonnes in 2024, a figure which will rise to 228 thousand in 2025. The global supply of lithium will however grow by 25% in 2025 and 15% in 2026according to UBS, which predicts a supply surplus until at least 2027.
