Lithium end markets continued to show momentum in the first quarter of 2025, driven by growth in electric vehicle (EV) sales and robust demand for energy storage systems (ESS). EV sales growth in the quarter was led by Europe, followed by China, while the ESS sector benefited from both structural demand and pre-buying activity in response to tariff uncertainty.

In China, wholesale new energy vehicle (NEV) sales rose 42% year-over-year (y/y). BYD recorded one of the strongest performances, selling over 1 million vehicles during the quarter. BYD is targeting over 30% volume growth this year, with a goal of 5.5 million vehicles sold in 2025. The Chinese market also saw continued momentum from new, affordable EV models such as Xiaomi's SU7.

European EV sales surged at the start of the year, underpinned by the launch of lower-cost models. UK battery electric vehicle (BEV) sales rose 43% y/y in 1Q25. Meanwhile, in Germany, BEV sales increased by 39%, Italy 72%, and Spain 59%. Despite recent updates to CO2 emissions legislation, product innovation and competitive pricing are driving consumer uptake. Additionally, several Chinese automakers are establishing manufacturing facilities in Europe, with vehicle deliveries expected to begin by early 2026 - further supporting future growth.

In the U.S., EV sales increased 11% y/y in 1Q25, according to Cox Automotive. New releases, such as the Porsche Macan and Chevy Equinox EV, are gaining traction, and General Motors nearly doubled its EV sales from the prior year. While sales at the start of the year have been encouraging, potential changes to EV subsidies may introduce some volatility in the months ahead.

Energy storage remains the fastest-growing segment of the lithium market, now accounting for approximately one-fifth of global lithium demand. Industry forecasts project ESS demand to grow by more than 50% in 2025, even after accounting for tariff-related headwinds. Tesla announced 10.4GWh of energy storage deployments in 1Q25, which grew 157% y/y and 5% quarter-on-quarter (q/q), demonstrating strong growth in their ESS segment. Analysts expect the ESS battery market to exceed 2TWh by 2030 - a nearly tenfold increase from 2024 levels.

Spodumene prices have stabilized between $700 - $900/tonne since mid-2024. In 1Q25, Shanghai Metals Market (SMM) reported an average CIF China spodumene price of $834/tonne - down 17% y/y, but up 6% from the prior quarter. As of April 29, 2025, prices stood at $773/tonne. Current pricing remains below reinvestment thresholds and within the global cost curve, prompting over 10% of global supply to be curtailed. Capital expenditure plans across the industry have been significantly scaled back. According to Fastmarkets, lepidolite and recycling projects are operating at negative margins, while profitability for brine and spodumene projects have also declined. As a result, supply growth is expected to moderate.