Material Insights · Understanding the Material World

Lithium and Vehicles, ships, rail, aircraft

Batteries take about 88% of the world's lithium and electric cars take most battery output, so EV sales now set lithium demand and its price cycle, which swung from an eightfold rise in 2021 to 2022 to a fall of over 80% between 2023 and early 2025.

Lithium (commodity) and Vehicles, ships, rail, aircraft (industry): 5 relationships.

How they are linked

1. Battery cathodes and electrolyte

Physical flow · Strong · Lithium to vehicle batteries

Every lithium-ion cell needs lithium in its cathode and electrolyte, whether the cathode is lithium iron phosphate or nickel-rich, and lithium-ion cells power almost all EVs today; the site rates lithium 5 of 5 on criticality for EV battery cell and materials makers.

  • 88% batteries' share of world lithium end use, 2025 estimate
  • over 950 GWh EV battery demand, 2024, out of almost 1 TWh of all battery demand
  • over 85% electric cars' share of EV battery demand, 2024

EVs take the large majority of battery demand, with stationary storage the rest, so vehicle sales are the main driver of lithium consumption. Buses, two-wheelers, trucks and, at small scale, ships and aircraft use the same cells, which makes lithium the shared input across this whole industry.

Enterprise types that depend on it:

  • EV battery cell and materials makers: cathodes and electrolyte (criticality 5 of 5)

Sources: Material Insights; USGS; Argus Media

2. EV growth drives lithium demand

Transition · Rising · More EV sales raise lithium consumption

Because batteries dominate lithium use, the pace of EV adoption, together with battery size per vehicle, now sets how fast lithium demand grows.

  • nearly 30% growth in lithium demand, 2024
  • about 263,000 t world lithium consumption, 2025, up 20% on 2024

Lithium demand grew about three times faster in 2024 than its 10% a year average in the 2010s. Growth depends on EV sales in China and Europe in particular, which USGS cites as a reason for the price recovery in the second half of 2025.

Sources: USGS; IEA

3. Lithium price cycle

Cost and price · Strong · EV demand swings move lithium prices, and lithium prices move battery costs

New lithium mines take years to build while EV demand can jump within a year, so the price overshoots in both directions and feeds into cathode and cell costs for carmakers.

  • eightfold rise in lithium prices, 2021 to 2022
  • over 80% fall in lithium prices from 2023 to early 2025
  • $9,000 a tonne average battery-grade lithium carbonate price, 2025, down 31% from $11,800 in 2024

After the 2021 to 2022 spike, supply grew fast: world mine output rose from about 222,000 t in 2024 to about 290,000 t in 2025, excluding the United States. In China spot prices turned up during 2025, from about $9,300 a tonne in January to about $10,300 in November, as EV sales grew. Low prices help carmakers cut battery costs but weaken the case for new mines.

Sources: USGS; IEA

4. Concentrated cell making

Shared risk · Strong · Battery cell and material supply runs through China

Lithium is mined in several countries, led by Australia, but most battery cells are made in China, so carmakers elsewhere depend on Chinese battery output and on Chinese export rules for battery technology.

  • 85% China's share of global battery manufacturing capacity, 2024
  • 9 October 2025 Chinese export controls on high-energy cells and LFP cathode material, suspended from 7 November 2025 to 10 November 2026

China's October 2025 controls covered cells of at least 300 Wh per kg, certain LFP cathode material, ternary precursors and battery-making equipment. They are suspended only until 10 November 2026, so the risk can return at short notice. IEA expects China's share of cell capacity to ease to about two-thirds by 2030 as plants open elsewhere.

Sources: USGS; Argus Media; SMM; Global Times

5. India cell scheme

Policy · High in India · Indian incentives aim to localise the cells its vehicles import

India's EV makers rely almost entirely on imported cells, mainly from China, so the government's production-linked incentive for advanced chemistry cells aims to build domestic capacity.

  • 50 GWh cell capacity targeted by 2025 under the ACC PLI scheme
  • 1.4 GWh capacity commissioned within the scheme's 2025 timeline, 2.8% of target
  • ₹18,100 crore scheme outlay

Cell import dependence is close to 100%, and all the capacity commissioned under the scheme within its 2025 timeline was Ola Electric's. Until cell plants run at scale, Indian vehicle makers are exposed to both the lithium price and Chinese export policy on cells.

Sources: Energetica India (IEEFA and JMK Research); Business Today

For investors

Key learnings

  1. EV sales are the swing factor for lithium: batteries take 88% of supply and electric cars take over 85% of EV battery demand.
  2. The lithium price cycle is violent, an eightfold rise then a fall of over 80%, so lithium miners' earnings and carmakers' battery costs swing widely, and each swing helps one side at the other's expense.
  3. China's 85% share of battery manufacturing capacity in 2024, and its October 2025 cell controls suspended only until November 2026, matter more to carmakers than where lithium is mined.

What to track

  • Lithium carbonate and hydroxide prices, China spot: Rises signal tighter supply and higher cell costs for carmakers (Daily · SMM, Fastmarkets, GFEX futures)
  • Monthly EV sales in China and Europe: Faster sales raise lithium demand and support prices (Monthly · CAAM, ACEA, IEA)
  • Status of China's battery export controls: Reinstatement after the one-year suspension would restrict cell and cathode supply (As announced · MOFCOM)

For policymakers

Key learnings

  1. India's EV goals rest on imported cells: within the scheme's 2025 timeline only 1.4 GWh of a 50 GWh cell target was commissioned.
  2. Periods of low lithium prices are the time to secure offtake and stockpile, since the cycle has turned sharply before.
  3. Securing lithium raw material without domestic refining and cell capacity leaves the main dependence in place.

What to track

  • Capacity commissioned under the ACC PLI scheme: Shows whether import dependence for cells is falling (Quarterly · Ministry of Heavy Industries, IEEFA and JMK reviews)
  • India's imports of lithium-ion cells by source: A falling China share signals diversification (Monthly · Commerce ministry TradeStat)

India

India imports nearly all of its lithium-ion cells, mainly from China; its ₹18,100 crore cell scheme targeted 50 GWh by 2025 but only 1.4 GWh was commissioned within that timeline.

Sources

  1. Vehicles, ships, rail, aircraft: materials, Material Insights (2026)
  2. Mineral Commodity Summaries 2026: Lithium, USGS (2026)
  3. Global battery demand rises close to 1TWh in 2024: IEA, Argus Media (2025)
  4. Global Critical Minerals Outlook 2025 (extract), IEA (2025)
  5. China suspends lithium battery and material export controls for one year, SMM (2025)
  6. Only 2.8 percent of target capacity delivered yet under India's battery PLI scheme: IEEFA report, Energetica India (IEEFA and JMK Research) (2026)
  7. China suspends implementation of certain export control measures involving rare earths, lithium batteries and other critical resources: MOFCOM, Global Times (2025)
  8. India's battery manufacturing incentive scheme sees minuscule delivery, Business Today (2026)