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Lithium prices rose more than 400% in 2021; supply agreements failed to keep up

Why the most common lithium pricing mechanisms don't serve the strategic aims of the EV market

February 23, 2022
Battery materials Lithium

Lithium prices shot up by more than 400% in 2021, but producers’ profits didn’t follow the same trajectory. Instead, the vast majority of producers found themselves locked into long-term, fixed-price supply agreements, at prices as low as 300% below spot market rates.

A more sophisticated pricing mechanism is required to ensure the lithium market can attract the investment it needs to meet surging EV demand.

Lithium supply negotiations have not kept up with market conditions

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