Lithium still charged even as US EV ambitions fade; getting to know phosphate
Despite concerns surrounding U.S. EV ambitions and the expiration of the $7,500 subsidy, lithium demand remains robust. Focus has shifted towards global markets, particularly in China, which are driving significant consumption of lithium for electric vehicles and battery storage solutions.
What the desk is arguing
Lithium demand is expected to continue thriving beyond U.S. market dynamics, especially as North America represents only 10% of the global electric vehicle production landscape. The prominence of Chinese EVs and investment in battery storage solutions insiders suggests a more diversified demand profile for lithium, rendering bearish outlooks somewhat misplaced.
Supporting this perspective, discussions around the expected restart of lithium supply projects indicate potential upward revisions in demand forecasts. Furthermore, emerging technologies such as drones and robotic applications signal a broader spectrum of lithium usage, contrasting views suggesting a significant drop in demand based solely on U.S. subsidy changes.
Where it sits in our coverage
Our consensus target currently stands at 1.075, within a range of 1.04 to 1.12, aligned with expectations for sustained global demand for lithium. This outlook diverges from the current sentiment expressed by **BofA**, which foresees weaker demand trajectories possibly impacted by U.S. market trends.
Specific firm targets include: - **Barclays**: 1.10 for Dec-26 - **JPMorgan**: 1.10 for Dec-26 - **BofA**: 1.04 for Dec-26
How other firms see it
The views on lithium demand appear mixed in the market, with notable distinctions in outlook based on regional emphasis. **BofA** has a contrary stance, projecting lower targets based on expected headwinds from the U.S. EV market.
Conversely, firms seeing potential in global lithium markets, including **JPMorgan** and **Barclays**, maintain aligned views with upward targets, reflecting a more optimistic take on lithium's future growth.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Global lithium demand remains strong despite U.S. subsidy expirations.
- 02China's EV production significantly impacts overall lithium consumption.
- 03Emerging tech applications present new avenues for lithium usage.
Market implications
The resilience of lithium demand in global markets could lead to a stronger pricing environment, mitigating the domestic concerns posed by U.S. policies. Investors should remain alert to supply chain dynamics and technology advancements that may influence market sentiment.
Risks to this view
Key risks include potential policy shifts in other major markets affecting global demand, unanticipated supply chain disruptions, and shifts in consumer acceptance of alternative energy sources that could alter lithium's demand outlook.
Eyes off US roads to understand lithium demand It may have seemed as though 2025 would have been a challenging year for lithium but North American electric vehicle production accounted for only about 10% of the global total, even prior to the expiration of the $7500 subsidy. That's one reason that equities tied to the metal have fared well. Chinese EVs and battery storage, a beneficiary of data center investment, are much more important contributors to the lithium demand story today, while future drivers include drones and robots.
Rock discusses how all this translates for lithium demand and touches on the supply outlook where possible project restarts could have meaningful impact on our estimates. We pivot to Matt for a discussion of chemicals more broadly and discuss phosphate, where the demand tailwinds aren't as strong as but where supply constraints are stronger. We even get into common threads between lithium and phosphate.
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