The Automotive Electrification and its Impact on the Lithium Business

Abstrakt

High expectation over the future developments of the electric vehicle (EV) industry had a considerable impact over another less obvious business in the past ten years: lithium. The white mineral is one of the key ingredients for the production of lithium-ion batteries. The lithium-ion battery is currently the preferred choice for electric vehicles manufacturers thanks to its high energy density, self-discharge rate, and the high number of battery variation available in the market. For this reason, lithium prices have been continuously rising in the past years, together with industrial output and mineral exploration. Conversely, the average price of batteries has been decreasing, reducing the cost of electric vehicles and leading market observers to forecast an EVs boom within the next ten years. The purpose of this thesis project is to study the effect of such growth on the first part of its value chain, lithium compound producers: if on one hand EVs demand is forecasted to increase, the lithium market has been bouncing between industry consolidation, rising prices, and more recently oversupply and shrinking margins. Major firms in the sector have been struggling trading higher production with lower prices for the past two years. This study will first explore the main drivers affecting both the lithium mining sector and the EV sector. Then it will rely on scenario analysis to draw the main links between the two and explore possible future market developments until 2030. Finally, the authors will propose to describe possible business strategies that would help producers to maintain their leadership position and secure a stable long-term growth for the sector.