Lithium Prices Increasing as Demand Grows and Supply Shrinks

If you thought the price of your favorite power tool batteries already hurt your wallet, there’s more bad news and it’s not just inflation. According to a Fox Business report , battery prices could increase thanks to simple supply and demand.

A while back, we wrote about a potential lithium-ion battery shortage as we watched the rise of electric vehicles and the massive numbers of lithium-ion cells they require. That’s playing out in part, but there are other factors to consider.

One is the effect that China has on the manufacturing processes and supply chain. Even though there’s plenty of raw lithium in Australia, Chile, and even the US, it has to be processed before battery manufactures can create the cells. As the world’s largest processor of battery-grade lithium, there’s real concern about the tensions between China, the US, and other countries.

China also manufacturers many of the batteries we use for power tools and has to ship them over. Our current supply chain woes also have the potential to affect our supply at some point, though it hasn’t been an issue so far.

That’s causing some lithium-dependent manufacturers to scramble and secure as much lithium as they can, creating high demand and limited supply.

The result is lithium prices that are up around 240% in 2021 alone.

However, there’s light at the end of the tunnel, so don’t run over to your local Home Depot and buy them out of batteries for the cordless system you’re on. There’s a lag in finding the raw supply and getting the investment dollars, equipment, and infrastructure to mine it. Citing analysts from Citigroup, Fox Business says to expect production to exceed demand by 2025.

There may be a twist in the plot, though. As lithium mining gets closer to home in Nevada and North Carolina, so do the environmental concerns of the mining process. It will be interesting to see how the cultural sentiment reacts to large-scale lithium mining in the US and how regulators will respond to that.

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