Is this a gamechanger for the lithium industry?

According to Benchmark Minerals intelligence, there's a huge discrepancy between lithium prices and the lithium demand side.

In September 2018, analysts at CRU estimated a lithium surplus for the year of only 22k tons, against demand of 277k tons.

Let's take a look at key demand drivers for lithium.

First, there's electric vehicles (EV). According to Argus Media, lithium ion batteries in EVs have increased from 10 GWh to 70 GWh in only a decade, with estimates placing the market to reach 223 GWh by 2025, an increase of 300x from current levels.

EVs have been taking off in the United States, with sales increasing by 81% in 2018, though a more modest increase is expected in 2019. EVs take up 2.4% of total vehicles in the United States.

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Where demand is really soaring is in China. More than 2 million EVs will be sold this year, up from 1.1 million last year. It's part of the government's plan to have 50% market share for EVs by 2025.

Consumers in Europe are also turning towards EVs, which now make up considerable portions of total vehicle fleets in Norway, Holland and France. EV sales jumped 67% in Europe, led by affordable EV models from Renault and Nissan.

Fastmarket predicts EV market penetration of 15% by 2025, up from only 2% currently. But with such ambitious plans in place in China, one of the world's most important car markets, that figure could be on the conservative side.

According to Simon Moores of Benchmark Minerals, EVs and an increase in battery storage demand "has sparked a wave of lithium ion battery mega factories," such as Tesla's famous Gigafactory. Currently, 70 lithium-ion battery "mega" factories are under construction, up from only 17 in October 2017.

Elon Musk wants 20 gigafactories producing lithium batteries for Tesla EVs by the next decade. Benchmark thinks new factories will be using up 534,000 tons in new demand (on top of current demand of 200,000 tons) by 2028.