Lithium carbonate prices fell below CNY 72,000 per tonne in April, marking their lowest level in four years, as global supply continued to outstrip demand in key markets. Despite growing optimism around the energy transition and electric vehicle (EV) adoption, lithium markets remain under pressure due to persistent oversupply.
Lithium falls to four-year low
In China, the world’s largest EV market, sales of new energy vehicles (NEVs) climbed 38% year-on-year to 991,000 units in March, according to data from the China Passenger Car Association. While the growth figure appears strong on the surface, it fell just short of the association’s forecast of 1,000,000 units — a symbolic miss that underscores a broader slowdown in momentum, even amid generous government subsidies aimed at boosting vehicle trade-ins and accelerating the shift to cleaner transportation.
This data aligns with an emerging pattern: the exponential growth that characterized China's EV boom at the start of the 2020s has given way to a more tempered, uneven expansion. As a result, Beijing has pivoted its support toward the upstream segment, introducing subsidies for battery producers to stabilize the sector. However, this policy response has had unintended consequences — notably, a surge in battery output that has further exacerbated the existing supply glut. With inventories already high, EV manufacturers are adopting a cautious approach, holding back on entering new procurement deals and instead drawing from existing stockpiles.
Miners remain reluctant to scale back operations
Despite the deteriorating price environment, lithium supply is unlikely to adjust in tandem with market conditions. Miners remain reluctant to scale back operations, as doing so risks losing valuable market share and jeopardizing long-term relationships with battery manufacturers and state-backed entities. Many producers are choosing to endure the current low-price environment in hopes of a future rebound, especially as global EV demand is expected to recover in the medium to long term. In the meantime, the lithium market appears locked in a cycle of oversupply, with downward pressure on prices likely to persist unless demand picks up more sharply or meaningful production cuts are implemented.
