Lithium stocks rally on EV sales, EU investment

China BEV sales saw the strongest growth, with sales up 21% month on month and 16% over the last 12 months. US BEV penetration rates remained flat at 9% in August, but a 10% increase in total passenger vehicle sales saw BEV sales lift 10% month on month and 8% over the year to date.

EU penetration rates were up 5 percentage points in August to 17%, while a 30% decline in total passenger vehicle sales saw BEV sales fall 11% during the month.

The context: Lithium producers have grappled with softening demand in the battery-making material despite a slight recovery in prices since the start of the year.

While the August data shows an improvement in BEV sales globally, year-to-date growth is still lagging growth in lithium supply, while lithium prices remain on the low for this cycle, JP Morgan's Fagan noted.

"Prices are resting on the cost curve, but until we see more aggressive supply cuts, and/or a sustained demand acceleration, pricing tension is unlikely to emerge," he said. "We therefore remain cautious on the lithium equities near term."

Elsewhere, the European Union ambassador in Canberra Gabriele Visentin said the EU would like Australia to make foreign investment easier as the bloc looks to diversify its supply chain for critical minerals, Reuters reported.

Visentin noted that the EU was eager to grow investment in Australia, especially in relation to critical raw materials, including lithium, as it seeks to break China's dominance in their supply.

What they said: "We want to invest more and more in likeminded partners," Visentin said.

"We would like to do even more and we would like to see an environment here in Australia which will encourage even more foreign direct investment," he said.