The global lithium market is geared up to enter a new growth cycle as it navigates away from the choppy waters of 2025 and rides a wave of energy and national security-linked demand.
Lithium prices have fallen steadily since the highs reached at the end of 2022, reaching a low in mid-June this year of below $7,500/t cif China for lithium carbonate. Fears of oversupply, uneven electric vehicle (EV) uptake and trade tariffs weakened sentiment over the two-and-a-half year period. But prices have since recovered. The market was at $11,500-11,600/t cif China on 9 December. And a sustained new cycle of price increases is now expected, driven by increased build-out of battery energy storage system (Bess) — which many expect will surpass demand from EVs by the late 2020s. Increased scrutiny of lithium supply chains from eco-conscious buyers and growing engagement in the market by western governments may also create an emphasis on fairer pricing and challenge monopolistic practices.
EV adoption drove the last lithium cycle, but this latest cycle will rely on a few new sources of demand. Fast growth in solar power installations, artificial intelligence (AI) data centres, autonomous machines and humanoid robots will all contribute to higher demand for energy storage batteries, alongside continued growth in EV use.
Record solar installations across Europe, the US and Asia-Pacific are driving growth in Bess deployments. As grids adapt to a higher penetration of renewable energy sources, storage is becoming essential to balance the intermittency of these sources, and to stabilise frequency. And operators of AI data centres are exploring on-site lithium-ion storage not just for back-up supply but also to manage peak demand and reduce pressure on energy markets. Some hyper-scale facilities now rival small cities in terms of energy use, creating a new, sustained source of industrial demand for lithium.
Humanoid and autonomous robots are likely to become a meaningful new source of lithium demand in the next decade. Advances in AI, sensors and actuators are rapidly moving robots out of controlled industrial settings and into logistics, healthcare, defence, construction and domestic services. The global humanoid robotics market could grow into a $5 trillion industry by 2050, reflecting not just hardware sales but software, services and supporting supply chains, investment bank Morgan Stanley said.
"Humanoid robots will be far bigger than cars. Ultimately, I think there will be more humanoid robots than people," EV company Tesla chief executive and founder Elon Musk said at the launch of the Tesla Optimus 3 robot this year.
Unit numbers are currently small but even conservative forecasts suggest the sector will create material battery demand. A typical humanoid robot is expected to carry a lithium-ion battery pack of roughly 2–5kWh, depending on size, payload and duty cycle — similar to the capacity of a small electric scooter or home storage module. At scale, fleets of robots operating continuously will require frequent charging, replacement packs and stationary back-up systems, creating second-order demand for lithium beyond transport. As automation increasingly becomes a national security priority, humanoid robotics could evolve from a niche application into a structurally important driver of long-term lithium consumption.
Price floors and tightening standards
Policy, finance and geopolitics are increasingly shaping lithium prices, in addition to demand growth. After a few years of extreme volatility, the industry is reaching a consensus that some form of price stability is needed to build the next wave of lithium supply.
This is already reflected in contract structures, government intervention and new efforts to formalise trust and transparency across the supply chain.
The growing prevalence of price floors in long-term offtake agreements is one of the clearest signals. Producers, converters and financiers are moving away from pure spot exposure and towards hybrid contracts that include minimum pricing thresholds to underwrite project economics. Long-term agreements increasingly include floor mechanisms designed to protect projects during downturns, with some contracts reportedly triggering these floors during the 2024-25 slump, a major industry participant said. This shift reflects a need to make lithium projects financeable in a world where capital spending is more controlled and geopolitical developments are more intrusive.
Governments are also becoming more explicit in their role. The ideas of state-backed price floors or strategic offtake have entered mainstream policy discussions in Australia, with senior officials openly acknowledging that floor prices are one tool among many to support domestic supply chains. The logic is that if lithium is treated as strategic infrastructure — on par with energy grids or defence manufacturing — then markets alone may not be trusted to deliver stable investment signals.
At the same time, the industry is attempting to address a deeper credibility issue. The emergence of initiatives such as the International Lithium Association's PCF stamp reflects a push to create a recognised "mark of trust" for lithium products, particularly for buyers facing mounting regulatory and environmental, social and governance scrutiny. Over time, this could contribute to a two-tier market, where verified, low-carbon and traceable lithium commands a structural premium over unverified material. While not a price mechanism in itself, such certification frameworks may indirectly support higher effective price floors by narrowing the pool of acceptable supply for western buyers.
These forces suggest a lithium market that is less cyclical and more structurally managed. Trade tensions, national security concerns and industrial policy are encouraging longer contracts, government-backed demand and pricing mechanisms that reduce downside risk. The result may not be a return to the extreme price highs of 2022, but it could see the emergence of a higher and more resilient pricing baseline shaped as much by policy and trust as by supply and demand.
