Lithium is entering its third major pricing cycle amidst strong structural demand and a lagging supply response, said UBS as it raised its lithium price forecasts by 74%.
The bank’s analysts now expect global lithium demand to rise 14% in 2026 and 16% in 2027, driven by a rebound in electric vehicle (EV) sales and accelerating investment in battery energy storage systems (BESS), especially in China.
Demand is forecast to double by the end of the decade to 3.4 million tonnes, growing at a 13% compound annual rate through to 2035.
Analyst Lachlan Shaw said EVs are “now close to achieving so-called triple parity” – cost, range and charging time – with UBS analysis showing battery cell costs have halved.
That, he added, should “accelerate EV growth sales towards the end of the decade” despite near-term headwinds in the US.
China’s new pricing policy for energy storage has also triggered a sharp upgrade to expected BESS demand, now seen accounting for 42% of lithium use by 2035, up from 8% in 2020.
While supply increased 18% in 2025, it remains behind demand, leading to market deficits and inventory drawdowns. UBS expects a more material supply response from 2027, but notes that price volatility will likely remain elevated.