Uncertainty in the price of lithium may risk EV supply

Uncertainty in the price of lithium may risk the future supply of electric vehicles (EVs). 

In the last decade, lithium has become a highly prized mineral worldwide. 

It is currently the main component of electric vehicle batteries and is gaining importance in systems that store energy from the stationary market (i.e. buildings and residential properties). 

Unlike other raw materials, the lithium market is fully globalised and suffers from significant price fluctuations, often without any apparent cause. 

Members from the UOC’s Faculty of Economics and Business have warned that this volatility and uncertainty could affect the introduction of EVs. 

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To avoid the volatility of lithium prices and possible lithium bubbles, the researchers propose the adoption of measures such as stabilisation funds and the creation of capital reserves. 

These strategies could help to reduce the risk for producers by regularising the market. 

Similarly, it is also necessary to design medium and long-term planning by governments and large companies in the sector, with the aim of providing greater security and diversifying the operational risks inherent in the lithium market. 

Jorge M. Uribe, a member of the UOC’s Faculty of Economics and Business said: ‘The prices of lithium, one of the most important minerals at present for the energy transition and the transport sector, are not very stable, and there is evidence of a significant presence of speculative bubbles.

‘We tend to think that prices reflect the market’s situation and that they automatically adjust to supply and demand, but this is not always the case. In the case of lithium, the situation is very delicate, because this mineral is essential to enabling the energy transition towards more sustainable and less polluting models in the mobility and transport sector. Without lithium, there is no way for electric vehicles to thrive and replace combustion vehicles.

‘Currently, no technology is as efficient as lithium-based technologies for the production of batteries at a reasonable cost.

‘That’s why this mineral is more important every day, especially in the transport sector and in the transition to electric vehicles.’ 

Photo by Markus Spiske