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Lithium demand surges along with growth in electric vehicle market

GlobalData forecasts that demand for lithium will more than double to 58,300 tonnes in 2022.
Tesla electric vehicle
EV demand is expected to grow at a CAGR of 15.6% in the next few years

Electric vehicles (EVs) represent the future of global transportation with demand expected to grow at an annual rate of 15.6% over the next five years, presenting opportunities for lithium producers.

Data and analytics company GlobalData forecasts that demand for lithium, a key ingredient in lithium-ion batteries used in EVs, will more than double from 26,700 tonnes in 2018 to 58,300 tonnes in 2022.

Tesla leading the way

Most vehicle manufacturers are advancing along the path of EV production with specialist Tesla Inc (NASDAQ:TSLA) leading the way.

GlobalData says the CAGR of 15.6% is being driven primarily by the growing popularity of EVs across countries in the Asia-Pacific (APAC) and Europe.

It further reveals that China will lead the global EV market with more than 50% share and grow three times as fast as the US over the next five years.

In 2017, 1.1 million new EVs were sold globally, of which China accounted for more than 50%, followed by the US with 17.3%.

In Europe, Norway accounted for 5.4% of global sales, followed by Germany with 4.8% and the UK with 4.1%.

Increased lithium consumption

The demand will result in increased consumption of lithium and support investment in mine expansions across Chile and Australia as well as new mine development in Chile, Australia, Argentina and North America.

A number of ASX-listed companies are active in this space, including Lithium Australia NL (ASX:LIT), European Lithium Ltd (ASX:EUR), Piedmont Lithium Ltd (ASX:PLL), Anson Resources Ltd (ASX:ASN) and Argosy Minerals Limited (ASX:AGY).

Others include Neometals Ltd (ASX:NMT), Core Exploration Ltd (ASX:CXO), Galan Lithium Ltd (ASX:GLN), Latin Resources Ltd (ASX:LSR) and Sayona Mining Ltd (ASX:SYA).

EV use encouraged

GlobalData’s senior mining analyst Vinneth Bajaj said, “Several national governments are encouraging the adaption of EVs by providing various tax incentives and subsidies to the manufacturers and end users.

“Additionally, efforts to reduce greenhouse gas emissions have led to much technological advancement in EVs and made them a viable and safe alternative to traditional vehicles.”

Over the next five years, global EV sales are expected to increase to more than 3-million vehicles, primarily driven by APAC and Europe.

EV sales in the US, Norway, Germany and Japan are expected to grow at CAGRs of 9.2%, 7%, 8.2% and 8.2% to reach 380,000, 107,000, 100,000, and 99,000 vehicles, respectively, in 2022.

Largest increase in China

These numbers include battery electric vehicles (BEV) and plug-in hybrid electric vehicles (PHEV).

Bajaj said, “The largest increase will be in China, which is expected to boost its EV sales from 579,000 in 2017 to 1.5 million by 2022.

“Current government policies and subsidies are making China a lucrative market for industry investments due to which the country’s EV market is poised to grow three times as fast as the US during the outlook period.”

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December 13 2016

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