Charging Ahead or Breaking Down? The Fragile Lithium Market
Charging Ahead or Breaking Down? The Fragile Lithium Market Lithium-ion battery run electric vehicles (EVs) have been cruising roads since the start of 2008 with the release of the Tesla Roadster. However, in recent years, their presence has increased. In the first fiscal quarter of 2025, global EV sales grew by 35% (JP Morgan). Whether consumers choose an electric vehicle for their apparent environmental sustainability, or because they are more cost efficient, it is clear that electric vehicles are charging ahead. The rapid rise of electric vehicles has been celebrated as a step towards environmental sustainability. Their low emissions are a major appeal of electric vehicles to consumers, yet their true environmental impact can be contested. Behind this green energy revolution lies a volatile lithium market driven by increasing demand and a constrained supply with the growing question of who will ultimately control the market and how it will affect global stock prices.
There are two primary ways of mining lithium: brine extraction and hard rock mining. Brine extraction is the process of pumping a salty liquid, called brine, from the earth’s surface, and placing it in pools where the water may evaporate and leave behind lithium content. The second, and more commonly used method, hard rock mining, is the process of extracting lithium from a mineral called spodumene. After crushing and chemical processing, the lithium is extracted. This method, however, creates about 11 tons of carbon dioxide per 1 ton of lithium (MIT climate).
Additionally, the mining of lithium and other material used in producing EVs has a large environmental footprint in production countries. These mines may cause chemical leaks into local water supplies, which damages surrounding ecosystems (MIT climate). Lithium is most abundant in Australia, China, and the “lithium triangle”, which includes Chile, Argentina, and Bolivia. In 2024, global lithium production reached around 240,000 metric tons, of which about 87% goes towards battery production (Williams). Australia, the number one producer, reached about 88,000 metric tons in 2024, followed by 49,000 MT from Chile, and 41,000 MT from China (Williams). Although China is third in production, they undoubtedly lead in imports. In 2023, China imported about $4.4 billion USD worth of lithium, about 15.7% of the global supply (Statista). China is also the number one country in lithium processing, holding about 60-70% of global lithium refining capacity (Statista). Ganfeng Lithium, a private Chinese lithium production company, with a market cap of $7.5 billion USD are projected by the Investing News Network to hold 20% of global market share in the lithium industry in coming years (Williams). With large corporations holding the majority of the supply, there is risk for price manipulation and supply withholding. There is also vulnerability in the lithium supply chain. If China restricts exports, or if taxes and regulations are put in place by the Australian or Chilean government, global battery production markets will suffer and stocks for electric vehicle firms will plumet.
The US has one of the largest car markets in the world- second only to China (Focus2Move). Former US president Joe Biden put in place an executive order during his administration aiming to reduce automobile greenhouse gas emissions. The executive order set as a target that 50% of new vehicles sold in the US be zero-emission by 2030. It also created a $7,500 tax credit for each brand-new electric vehicle purchased, and a $4,000 credit for each used EV. President Trump, in his new administration, has reversed Biden’s electric vehicle mandate, ending government subsidies September 30, and implementing his own tax and spending bill, “The Big Beautiful Bill”(CNBC). This bill promotes domestic drilling for oil and petroleum, and rescinds funding for dozens of environmental projects like the Greenhouse Gas Reduction Fund (United States, H.R.1). With Trump pulling out his interest in the lithium market, it gives China an opening to continue their buyout of global lithium supply. This gives Trump an opportunity to undermine China in the oil market. President Trump’s “Big Beautiful Bill” is an attempt to gain energy independence for the US and reduce China’s leverage over energy resources, because right now the US gets majority of its lithium-ion batteries from China (CNBC). While the Biden administration’s approach was to compete with China within the global clean-energy economy, Trump’s strategy is disengagement from global supply chains, and emphasizes domestic extraction.
In the short term, this strategy will likely hurt renewable energy and EV stocks, like Tesla and Rivian, as the government takes away subsidies for electric vehicles and funds domestic mining projects. Meanwhile, increased government funding for domestic mining will benefit oil and gas companies, like Chevron, along with mining and materials firms and industrial manufacturing companies. However, there are a handful of lithium deposits within the US, mainly in Nevada and South Carolina (U.S. Geological Survey). In the long-run, people like Tesla CEO Elon Musk, who have means to innovate and invest in development projects could begin to refine and produce lithium in the US. If so, the US could successfully reduce its dependence on China and stay in the lithium market as a main player. With Trump’s deregulation in US mining, lithium projects will likely become more abundant and efficient, but likely with minimal considerations towards the environment. While there is a restricted supply of lithium in the US, it is likely that innovation in new sectors of energy, like hydrogen power, will also expand, which could also potentially destabilize the market demand for lithium in the long run.
Even with domestic production of lithium, production assembly is likely to take a long time. Until then, there will continue to be shortages, decreasing market confidence for lithium. However, US independence from Chinese firms could be beneficial, not just for the US, but for all US allies in trade. Domestically, it would create more jobs, reduce the US’s trade deficit and increase freedom in foreign policy with allies like Canada without fear of economic retaliation from China.
Ultimately, the lithium market is not stable. There is possibility for future stability, however, it is conditional upon several economic, political, and technological factors. If China takes complete control of the market, it will stabilize, but US companies and US allies should be prepared to lose money in their stocks. Alternative green energy sources becoming more profuse, like hydrogen and solar, will also destabilize and devalue lithium, which is cause for consideration when contemplating the future of the lithium market. Thus, the trajectory of the global lithium market remains indeterminate, but is continuously being shaped by shifting political alliances, technological advances, and the uneasy balance between growth and sustainability.
References
CNBC. “Automakers, Trump & Electric Vehicles: EV Policies, Ford, GM, Tesla, Rivian.” CNBC, 11 Aug. 2025, https://www.cnbc.com/2025/08/11/automakers-trump-electricvehicles-ev-policies-ford-gm-tesla-rivian.html.
Focus2move. “World Car Markets 2025. The Top 50 Countries.” https://www.focus2move.com/global-auto-markets/?utm 1 Oct. 2025
J.P. Morgan. “What Is the Electric Vehicle (EV) Boom?” J.P. Morgan Insights, https://www.jpmorgan.com/insights/investing/investment-trends/what-is-the-electricvehicle-boom.
MIT Environmental Solutions Initiative. “How Is Lithium Mined?” Ask MIT Climate, https://climate.mit.edu/ask-mit/how-lithium-mined.
Statista. “Leading Importers of Lithium Carbonate” (Statista chart/page), https://www.statista.com/statistics/1248447/leading-importers-of-lithium-carbonate/.
United States. H.R. 1, 119th Cong. (2025-2026): One Big Beautiful Bill Act. Library of Congress, https://www.congress.gov/bill/119th-congress/house-bill/1/text
U.S. Geological Survey. “Lithium Deposits in the United States.” USGS Data Release, 5 Aug. 2019 (or 2020, check original), https://www.usgs.gov/data/lithium-deposits-united-states.
Williams, Georgia. “7 Biggest Lithium-Mining Companies in 2025.” InvestingNews, 15 Oct. 2025, https://investingnews.com/daily/resource-investing/battery-metals-investing/lithiuminvesting/top-lithium-producers/.