Many investors and hurt speculators have been waiting for lithium stocks to finally turn around. After the EV and battery bubble burst in late 2022, losses have been staggering for those who stayed on board, betting on a small correction only. Bullish arguments are abundant, like the long-term demand story that fueled the boom, low commodity prices being the cure for low commodity prices, and recently also direct government investments into certain resource companies. I am telling you why I remain on the sidelines nonetheless.
Summary and key takeaways from today’s Weekly
– The lithium bear market has been very painful, after a previous 10x in the commodity.
– First signs of hope emerge and lithium stocks like Albemarle have shown some strength recently.
– I sketch a scenario, respectively throw around a few ideas that could prevent a resumption of the lithium bull market.
The charm of commodity stocks is of course their explosive potential for outsized gains. Not just in double-digit percentages, but factors – with proper timing.
It is not even mandatory to pick the absolute lows and highs (which is close to impossible anyhow). But one can easily distinguish whether the current state is closer to a hopeless depression or a roaring bull market with elevated assumptions.
Such phenomenal returns assume a commodity bull market, no nationalizations or expropriations of assets in more adventurous jurisdictions, no mine closures due to accidents or weather events, and at least some management execution. Not doing stupid things can be enough in times when the tide lifts all boasts, as they say.
Speaking of stupidity, lithium had its mega bull market between early 2021 and late 2022, a bit less than two full years. The resource went up a cool 10x, driven by an EV and battery storage bubble of high proportions.
Today, lithium is back where it started.
The bear market has been so devastating that for example the world’s biggest lithium producer, Albemarle (ISIN: US0126531013, Ticker: ALB), is still trading significantly below its 2021 levels. However, since their low in April 2025, ALB shares have almost doubled quietly.
Has a new bull market started?
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both as per 08 October 2025 market close – since August 2022
Staying away from lithium
As I wrote in my teaser, there are good arguments for the bull market’s next leg up.
The initial rising-demand thesis, though now on lower assumptions, could drive lithium prices higher again and with it lithium stocks like ALB.
From a supply perspective, low commodity prices at some point pressure the weakest links in the chain, enforcing production curtailments and at the extreme entire mine closures or even bankruptcies. Such a market clean up reduces the available resource and at some point scarcity creates a new bull market.
This by the way is the much more robust form of a bull market as supply cannot be added out of nowhere, unlike demand which can rise or fall almost overnight.
At least significantly quicker and with a higher surprise factor.
The third maybe-bullish factor, a more modern driver, is the sudden hedge-fund activity of the US government. The current administration has started to invest in certain equities it deems to be of high strategic and national importance.
For example, today as of writing I have seen the headline that the administration bought a 10% stake in a small Canadian explorer of the name Trilogy Minerals (ISIN: CA89621C1059, Ticker: TMQ) with copper, silver, zinc and other key minerals in Alaska.
Earlier in the year, there was the announcement the US government bought a stake in MP Materials (ISIN: US5533681012, Ticker: MP) and offered on top a price floor to shield the company from too low rare-earth prices (where China is dominating, I wrote about MP in the past, see here).
The company owns the biggest rare-earth mine on US soil, and it has built a full supply chain from rare-earth to magnet production.
Back to lithium, a bit more than a week ago, it was first rumored and later confirmed, that the US government bought an equity stake in Lithium Americas (ISIN: CA53681J1030, Ticker: LAC).
This multiplied the stock price.
General Motors (ISIN: US37045V1008, Ticker: GM) is relying on LAC’s Thacker Pass lithium deposit to supply much of the lithium needs for its electrification push.
While such announcements can manipulate skyrocket individual names, the price of lithium the commodity, so far does not seem to care much.
Lithium is still trading around the level before it took off in mid-2021.
Looking closer, from this year’s low, the price jumped around 20%. But nonetheless, it remains more or less where it was at the beginning of this year.
In August, we had these breaking news which was price supportive.
Unfortunately, not even a full month later, another cold shower splashed and took many bulls by the horns.
For me, this is clearly not a bull market, but a highly nervous and extremely news-driven state of hopium that the bleeding please finally stops.
In other words, there are still many weak hands on board.
Looking at the five-year chart of ALB, the stock is still close to the bottom. It still has not reached is lower levels from 2021. To reach the high, the stock would need to more than triple.
By the way, earlier this year I already featured Albemarle – a dividend aristocrat – in one of my Weeklies about potential dividend cuts, where I also analyzed the balance sheet and cash generation (see here).
As the market usually front-runs, respectively anticipates developments before they truly occur, it might be interesting that ALB stock over the last twelve months is showing a more promising picture.
For bulls, this might be the final proof that now is the time to either jump back in or where much of the pain has started to ease.
I mean, almost a double over the last half year looks promising.
I am not so convinced for various reasons.
First of all, the over-supply situation doesn’t seem to have been solved when switching on one mine is enough to send prices down again. On top, demand projections turned out to be less robust than initially propagated, which in times of job layoffs, plant closures and tighter discretionary spending makes for a shaky recovery story.
But this is not even my main point today. It is technology and technological evolution.
Back when I was a kid, I remember having had first Nickel-Cadmium (NiCd), later Nickel-Metal Hydride (NiMH) batteries for my Gameboy. I recharged them frequently and experienced that the Nickel-Metal Hydride chemistry had a better storage capacity / runtime for my pleasure.
This then-state-of-the-art chemistry was a step forward, not only offering a much higher energy density, but also a less pronounced memory effect, and they were less toxic due to the lack of Cadmium. On the downside, they were more expensive (not my problem back then), and they had in total less charging cycles before degradation / noticeable wear-off set in.
Later, a major revolution followed when lithium-powered batteries became mainstream.
Not only was the hated memory effect finally gone, but energy density increased even more, and the batteries discharged themselves significantly slower when unused. Until today, lithium batteries are not all the same and of the same chemistry, as different blends allow for different traits and uses cases.
While Lithium-Ion (Li–ion), the common lithium battery so to speak, has a wide-spread adoption by being used in smartphones, laptops, wearables, and practically in most consumer devices, there are also other mixtures like Lithium Iron Phosphate (LFP, lower density, but longer cycle life, used in EVs) or Lithium-Polymer (Li–Po) with a gel-like or solid polymer electrolyte instead of a liquid like in Lithium-Ion.
This liquid part is one the biggest points of criticism, as it is inflammable, like seen or heard of regarding exploding smartphone batteries or burning EVs. Li–Po struggles with a lower energy density and cycle life, while still having safety risks.
Tradeoffs need to be made.
There are also multiple other chemistry mixes with different pros and cons, but the above are the key ones to know in today’s environment. The rest has more a niche-type use case.
But my key point is that battery tech will likely sooner or later see another disruption. This has happened in the past and it is likely to happened again. We only don’t know when and to which extend it will happen. What’s coming more and more to the surface is a Sodium–Ion (Na-ion) chemistry – without lithium.
Coming straight to the point, it is unlikely Sodium–Ion will replace lithium batteries.
That might not even be necessary. Na–ion batteries, depending on the final chemistry mix, lower the safety issue and due to salt being much more abundant and easier to extract (sourced from seawater or salt deposits) compared to lithium, it is likely, once widely adopted, this chemistry will change the market dynamics.
Na–ion are heavier and have a lower energy density, making them not practical for high-performance and light-weight use cases. That’s why a full replacement seems unlikely.
But it is imaginable this mix takes a significant chunk in cheap EVs with the primary use in cities where much mileage is not required. Or certain stationary applications like backup energy storage where costs are more important than weight or absolute performance as these devices are not moved around and only accessed in emergencies, but not on a daily basis.
Na–ion batteries could dominate specific markets like grid storage and budget EVs by 2030–2035, especially as production scales. Companies like CATL (ISIN: CNE100006WS8, Ticker: 3750 in Hongkong) are already producing sodium-ion batteries for EVs in China, with pilot projects underway.
That’s a possible outlook for the lower end of the battery market.
On the other side, it has long been more a rumor than a full-scale adoption, but let’s not forget solid-state batteries that have no liquid material inside. They offer not only much higher energy density and cycle life, but especially excel on the safety front. Problems: costs, infrastructure and scale.
CATL as the world’s biggest battery producer for EVs clearly needs to be watched, as EVs were and are a major pillar of the long-lithium story. But also Toyota (ISIN: JP3633400001, ticker: 7203) with its over 1,000 patents in this emerging tech. Toyota has been very cautious to jump quickly into the lithium-battery tech, and it seems it this was not the worst idea.
In the article linked below, the authors write BYD plans small-scale production of solid-state batteries by 2027, with a goal of mainstream adoption by 2030. That’s still a few years out and these goals need to be reached in the first place, but I would be cautious to assume lithium will resume its previous bull market as if nothing happened.
To be clear, solid-state batteries would not fully and immediately replace lithium.
That’s a common misconception.
If solid-state batteries become widely adopted with optimized designs that minimize (!) lithium use (solid-state still can contain lithium), lithium demand could be in jeopardy. Additionally, if mass production of these low-lithium or lithium-free batteries scales successfully by 2027, as CATL plans, it could significantly reduce the reliance on lithium, impacting its market dominance.
But solid-state will likely be more expensive so that lithium will still have its use case.
Many solid-state batteries, like CATL’s prototype, use a solid electrolyte (e.g., ceramics or sulfides) instead of the liquid electrolyte in lithium-ion batteries, which often contains lithium salts. The reduction isn’t guaranteed across all solid-state batteries.
Lithium-free or low-lithium solid-state batteries are still in early stages, and current leading designs (e.g., for EVs with 2,000 km range) prioritize performance, which often means retaining lithium.
Another company that has already started to roll out solid-state batteries is the Japanese Maxell (ISIN: JP3791800000, Ticker: 6810). This is a juggernaut in the battery and media industry.
Maxell derived its name from “Maximum capacity dry cell” (where it came from) and quickly expanded into magnetic recording media like audio cassettes, VHS tapes, and floppy disks. In the 1970s and 1980s, it gained fame for its high-quality cassettes. By the 1990s and 2000s, Maxell diversified into optical media (CD-R/RW, DVD±RW).
Unfortunately, Maxell today is a conglomerate with different, non-complementary divisions. But one of them is batteries and within it solid-state batteries, which began their first adoption in production robotics / factory automation.
Solid-state batteries are not foggy dreams anymore.
It will likely take time until this tech enters the consumer market.
But it seems to be only a question of time and execution (infrastructure, scale, and costs). I can imagine Sodium–Ion to take the low-end market where costs are the primary factor, with the added benefit of safety, while the solid-state tech will be interesting for high performance and state-of-the-art requirements in the early stages.
In the end, it is possible – I don’t know whether it happens and if so, when – that despite a growing battery market, lithium will lose nonetheless. If the above, which seems plausible for me, turns out to be the future even if only post 2030, there is no reason for another lithium bull market. And certainly not back to the old highs, as long as for example supply doesn’t get cut in half or so.
It is even possible that this was it and many lithium miners will need to conduct major write downs on their projects. Again, I don’t know if or whether this happens.
But it is this insecurity that makes lithium un-investable for me.
The only constant is change, to quote the Greek philosopher Heraclitus, so banking now on a new lithium bull market as if nothing happens in the background seems a bit too optimistic and naive.
What would fit almost perfectly into this scenario is the following:
We have found a gigantic lithium deposit here, a perfect final nail in the coffin, ironically speaking. Joking aside, I really would not be surprised if this turns out to be the typical late-to-the-party case.
And that’s why neither Albemarle, nor other lithium stocks are of interest for me.
I do not want to gamble on a potential government involvement (or even bailout) on one side. On the other, with new battery tech under development and one of many attempts likely achieving a breakthrough at some point, I cannot confidently say lithium will make it.
And even if lithium remains on the market, there’s a scenario where the battery growth story could bypass it, making many of today’s capacities redundant.
Conclusion
The lithium bear market has been very painful, after a previous 10x in the commodity.
First signs of hope emerge and lithium stocks like Albemarle have shown some strength recently.
I sketch a scenario, respectively throw around a few ideas that could prevent a resumption of the lithium bull market.
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