Lithium's Wild Ride: Navigating the Booms and Busts in the EV Revolution

Lithium, a critical component in the global shift towards clean energy, has gone from being relatively unknown to driving one of the most important transformations in modern technology.

As an ex-investment advisor who’s been closely involved with the lithium market for over a decade, I’ve had a front-row seat to its meteoric rise—and the volatility that comes with it.

In this piece, I’ll walk you through the highs and lows of the lithium market, share some insights from my experience, and explain why I believe we’re standing at a critical juncture in this industry.

Lithium 101: The Key to the Energy Transition

Before we dive into the market’s ups and downs, it’s important to understand why lithium is so essential.

Lithium has a wide range of applications—from pacemakers to smartphones—but the real investable opportunity lies in its use in electric vehicles (EVs).

Lithium-ion batteries are used in EV’s because they pack a huge amount of energy into a small space.

They also perform well in both high and low temperatures, which is critical for durability.

In 2020, global lithium demand for EV batteries was 113,000 metric tons. By 2025, that number is projected to leap to 787,000 metric tons, and by 2030, it’s expected to top 2 million metric tons.

That’s a massive jump, driven by the global transition to electric transportation.

And while it’s easy to get caught up in the sheer scale of these numbers, the reality is that lithium is becoming an indispensable part of our everyday lives and the future of mobility.

My Journey in the Lithium Market

I got my first real taste of the lithium market back in 2010 when I was an Investment Advisor at Canaccord, and Canada Lithium Corp’s stock started moving.

My office of brokers and I were all over it.

That deal set the stage for a decade of watching the lithium space evolve in what I’ll say is… miraculous ways.

Canada Lithium eventually merged with RB Energy, and after a series of acquisitions, it’s now operating as Piedmont Lithium (PLL), one of North America’s largest sources of hard-rock lithium.

You can read about that more in my article here.

But one of the most memorable deals for me was watching my friend Brian Pas Brega’s journey. In December 2015, he closed a placement at $0.30 a share, and within 18 months, he and his partners sold it for $265 million. 

Timing, as they say, is everything.

Lithium was trading at $6,500 per ton when they got in, and by the time they sold, it had risen to $16,000 per ton. That’s a 146% increase in just a couple of years.

The rollercoaster continued.

Lithium prices peaked at $86,000 per ton in 2022, but as of 2024, we’re back down to around $10,000 per ton.

This drop is largely due to oversupply, especially from China, which ramped up production by 44% in 2023. We’re now dealing with 180,000 metric tons of oversupply, and while it’s a tough spot for the market, I believe this imbalance will correct itself by the half way point of 2025.

Right now, the lithium market is feeling the effects of oversupply, which will continue into 2025.

However, I see this as a temporary issue.

Production cuts, combined with the continued growth in EV demand, will likely tip the scales back toward a demand-driven market, pushing prices up again.

When prices move, they tend to move quickly. And when they do, lithium producers will be in an excellent position to benefit.

We've seen it happen before, and I believe we’re on the verge of seeing it again.

Timing, as I’ve learned, is everything in this industry.

The demand for lithium is forecast to grow significantly over the next decade. By 2030, we’re expecting battery-grade lithium demand to hit 2 million metric tons, and by 2035, total demand could reach 3.8 million tons.

That’s a huge leap from the current level of just over 1 million tons.

While lithium’s growth rate may not match the headline-grabbing numbers of industries like AI, with a projected compound annual growth rate of 43% or 5G, with a CAGR of 37%, lithium’s projected 17.7% CAGR is still impressive.

It’s growing faster than industries like healthcare and e-commerce, which underscores just how crucial lithium is becoming in the broader technological landscape.

In my opinion, anyone serious about investing in lithium should start by looking at Albemarle Corporation. 

They’re one of the largest producers of lithium in the world, and they’re involved in both the extraction and refinement of lithium compounds.

Albemarle also provides lithium derivatives for a wide range of applications, but most importantly, they are the largest supplier of lithium for EV batteries.

Their market cap is currently just shy of $10 billion, but what’s interesting is how much their stock price has fluctuated with lithium prices.

For example, when lithium prices skyrocketed to $86,000 per ton in 2022, Albemarle’s stock jumped from $48 in 2020 to $334. That’s a 415% increase in just two years.

But with lithium prices down again, Albemarle is currently trading at around $88—essentially back to its 2020 levels.

This kind of volatility might scare some investors off, but I see it as an opportunity.

Albemarle has been expanding and upgrading its facilities in Australia and China, streamlining its joint ventures, and recently signed a partnership with BMW to supply lithium batteries for their high-performance premium EVs.

While their EBITDA is down 75% quarter over quarter due to the recent drop in lithium prices, Albemarle is positioning itself for a strong rebound when the market shifts back in favor of demand.

The lithium market is volatile, no doubt about it.

But with volatility comes opportunity.

As the world continues its shift toward electric vehicles and renewable energy, lithium demand is only going to increase.

Yes, we’re currently dealing with oversupply, but history shows us that the market will correct itself—and when it does, those who have positioned themselves wisely will be the ones to benefit.

For those looking to capitalize on this growth, understanding the market cycles and timing your investments is crucial.

I’ve seen it firsthand, and I believe we’re about to enter another exciting phase for lithium. Buckle up and as always;

Happy Hunting!