EV Sales Are Doing Great. Here’s Why Lithium Stocks Aren’t.

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Evercore ISI analyst Stephen Richardson explained by shares of lithium makers aren't doing better even though the metal's essential to batteries of electric...

Lithium is supposed to be a hot commodity and a smart way to play the rising demand for electric vehicles around the globe. So why are the stocks performing so terribly?

Lithium is a key component in the batteries that power Teslas and all other electric cars. EVs can’t be the reason for Albemarle’s struggles, though. EV sales are trending up about 33% year over year in the U.S., Europe, and China combined, according to data from car registration data trackers and Citigroup.

Inventories look like the better reason. “For much of first-half 2023 [inventory] destocking was the theme,” wrote Richardson. Destocking leads, eventually, to restocking, which means more buying by battery makers and EV companies. That just hasn’t happened yet. Newsletter Sign-up In other words, buyers don’t buy until falling prices seem ready to move up. After all, why buy today if prices will be lower tomorrow? Prices could start to rise in just a few weeks when companies start ordering material for 2024.

 

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