The year 2026 is poised to be significant for the lithium market, and those who monitor commodity prices should pay attention. Lithium, an essential component in the production of lithium-ion batteries, is vital for powering smartphones, laptops, electric vehicles (EVs), and large-scale energy storage systems. After experiencing substantial fluctuations in pricing over recent years, the market is beginning to see a resurgence, and the implications for mining and battery technologies could be profound.
Reflecting on recent history, the surge in global EV sales in 2020 dramatically increased the demand for lithium, leading to a meteoric rise in prices that soared from under $10 per kilogram to approximately $70 within just two years. This spike caught the attention of the tech industry, prompting a wave of interest in developing alternative battery technologies that could potentially reduce reliance on lithium. Innovations such as sodium-based batteries, iron-air technologies, and even experimental plastic-based batteries were explored as researchers and startups sought new methods for lithium extraction and recycling.
However, by late 2024 and into 2025, lithium prices fell back to around $10 per kilogram due to disappointing demand forecasts for EVs in the United States, coupled with increased mining activities. This decline made the urgency for lithium alternatives less pressing. Fast forward to today, and we see lithium prices on the rise again, fueled by robust EV growth in China—where EVs currently account for about 75% of battery demand—and increasing need for stationary storage solutions in both China and the U.S. As prices climb, new opportunities are emerging, particularly in alternative battery chemistries, such as sodium-ion batteries, which have been identified as a breakthrough technology for 2026.
Moreover, the extraction industry is expected to undergo significant transformation in response to fluctuating lithium prices. Currently, the majority of lithium is mined from Australian rock and then transported to China for processing. However, there is a growing movement towards establishing local supply chains for lithium processing. Notably, Tesla has commenced production at its lithium refinery in Texas, which began development in 2023. Should prices continue to rise, we may see further investments in processing facilities outside of China. Additionally, advancements in direct lithium extraction technology, which utilizes chemical processes to efficiently extract lithium from brine, are gaining traction, with several companies planning to launch commercial operations in the U.S. and Argentina this year. As the landscape evolves, it remains clear that keeping an eye on lithium prices is crucial for understanding the future of battery and mining technologies.
Source: Why 2026 is a hot year for lithium via MIT Technology Review