Key Takeaways
- Lithium carbonate prices fell from $80/kg in November 2022 to under $12/kg in mid-2026 an 85% decline driven by Chinese oversupply.
- Approximately 40% of planned new lithium projects outside China have been cancelled or indefinitely deferred due to low prices.
- Global EV penetration is still accelerating IEA projects EV sales to reach 35% of new car sales globally by 2028.
- Battery chemistries are shifting back toward lithium iron phosphate (LFP), which actually increases lithium intensity per kWh.
- Goldman Sachs and Macquarie both forecast lithium prices recovering to $18-22/kg by end of 2027.
Lithium’s price collapse has been one of the most dramatic in recent commodity market history. Lithium carbonate, the benchmark chemical for battery-grade lithium, peaked at approximately $80 per kilogram in November 2022 as automakers scrambled to secure EV battery supply. By mid-2026, the price had fallen to under $12/kg an 85% drawdown that has wiped out billions in market value and forced the cancellation or deferral of dozens of mining projects globally.
What Caused the Crash?
The primary cause was a massive build-out of Chinese lithium chemical refining capacity far exceeding the growth in EV demand, at least in the near term. Chinese refiners, anticipating strong demand, brought hundreds of thousands of tonnes of annual lithium hydroxide and carbonate capacity online in 2023-2025. This supply surge overwhelmed a market that, while growing, was not growing fast enough to absorb the new capacity.
Simultaneously, Western EV demand growth slowed below initial forecasts. Consumer hesitancy around charging infrastructure, higher-than-expected vehicle prices, and interest rate increases all contributed to softer-than-projected sales in North America and Europe through 2024-2025.
The Supply Response: Project Cancellations
Low prices have now triggered a significant supply response not from existing producers cutting back, but from new project developers abandoning plans. An estimated 40% of planned non-Chinese lithium projects have been cancelled or indefinitely deferred. This includes hard rock spodumene projects in Canada, Australia, and Zimbabwe, as well as brine projects in Argentina and Chile.
“Every month of sub-$12 lithium is another month of project cancellations that tighten the supply picture for 2028-2030. The market is essentially eating its own future supply.” Benchmark Mineral Intelligence, June 2026
Why Analysts Are Turning Bullish
The bull case for lithium recovery rests on a simple supply-demand argument: EV penetration continues to grow structurally, project cancellations are removing future supply, and current prices are below the all-in sustaining costs of most hard rock operations. The market cannot sustain $12/kg lithium indefinitely without triggering a supply response that eventually produces a price spike.
Goldman Sachs has published a note arguing that the lithium market will move back into deficit by late 2027, driven by accelerating EV demand from China and growing demand for grid-scale energy storage. Their price forecast is $18-22/kg by end-2027. Macquarie is similarly constructive, citing the LFP battery shift as a structural demand driver that is often underappreciated.