EV wobbles compound lithium oversupply woes for Australian miners
Weaker than expected European EV demand and a global oversupply of lithium has made Australian producers and their investors nervous. There are some, however, who predict prices have bottomed.
Few market observers would consider an 18% year-on-year growth outlook to be cause for concern. Yet predictions of slowing growth in global electric vehicle sales after the market expanded 26% in 2023 have sent shivers down the entire supply chain, from battery manufacturers to miners.
On the surface, the Chinese EV market is booming. Rystad Energy puts its share of the global market at 63%, up from 48% in 2021. Unlike their European counterparts, Chinese automakers such as BYD have developed cheaper entry-level vehicles designed for maximum mass appeal, making EV ownership affordable to millions more consumers.
In Europe, EVs remain a luxury, with the market dominated by Audi, BMW, Volkswagen and Volvo. It’s the sluggish growth in the European market that has analysts concerned about the outlook for the sector, particularly given that BYD is now producing enough vehicles to satisfy domestic demand and may start exporting to Europe. If successful, it may corner the lower price points and make it difficult for European car manufacturers to compete.
The high degree of vertical integration in the Chinese automotive market is concerning analysts because they reason it gives automakers unprecedented control of the entire EV supply chain. Automakers source nearly 100% of their batteries from domestic sources, according to Rystad Energy senior analyst Abhishek Murali.
