Electrification
Lithium Prices Surge on EV Demand from China
Lithium Prices Surge on EV Demand from China
Amid growing conviction on the bright future of electric vehicles (EVs), the scramble for battery metals like lithium is just beginning.
By the first week of 2022, prices for lithium carbonate, a key ingredient in lithium iron phosphate (LFP) batteries, reached a new high of 300,000 yuan or nearly $47,500 per ton in China.
The above graphic charts the exponential surge in both lithium prices and China’s EV sales between 2015 and 2021.
How Lithium Prices Changed in 2021
After brief spikes in 2016 and 2017, lithium prices were on a downtrend until 2021. With that context, it’s safe to say that the year’s 497% surge was nothing short of dramatic.
Here’s how lithium prices changed in 2021, on a quarterly basis:
Date | Lithium carbonate price per ton in China* | % increase in 2021 |
---|---|---|
January 01, 2021 | $7,328.90 | 0% |
April 01, 2021 | $13,396.90 | 82.70% |
July 01, 2021 | $14,024.40 | 91.40% |
October 01, 2021 | $27,733.70 | 278.50% |
December 31, 2021 | $43,732.80 | 496.70% |
*Represents prices for battery-grade lithium carbonate. Converted from yuan to USD via xe.com as of Jan 19, 2022.
Source: TradingEconomics
As producers struggled to keep up with rising demand for battery-grade lithium carbonate, prices increased six-fold in 2021.
This rise was amplified in October when Tesla announced a switch to LFP batteries for all of its standard-range cars. Previously, Tesla only used LFP batteries for cars produced in China.
EV Batteries and the Resurgence of LFP Cathodes
Why did Tesla make the switch?
LFP was the initial cathode chemistry used in lithium-ion batteries for EVs in China, the largest market for EVs. Over time, consumer preferences for longer driving ranges drove manufacturers towards higher-density lithium nickel manganese cobalt (NMC) cathodes, which can manage longer distances on a single charge.
However, most of the cobalt used in NMC batteries comes from the Democratic Republic of the Congo, where cobalt mining is associated with several humanitarian issues. These concerns, along with the high material cost of cobalt, prompted automakers to look at alternative cathode chemistries.
This has caused automakers like Tesla to turn back to LFP cathodes, which do not require cobalt and are relatively cheaper to produce.
Lithium’s Electric Future
According to BloombergNEF, global EV sales were on track to hit 6.3 million units in 2021—nearly double the total of 2020.
However, despite recent growth, EV adoption has a long way to go, with EVs making up just 4.3% of global auto sales in 2020. This suggests that the future is bright for battery metals like lithium, which will likely continue to be in high demand.
Electrification
Charted: The Energy Demand of U.S. Data Centers
Data center power needs are projected to triple by 2030.

Charted: The Energy Demand of U.S. Data Centers
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As the digital economy accelerates and generative AI becomes more deeply embedded in business and daily life, the physical infrastructure supporting these technologies is undergoing a transformative explosion.
In this graphic, we use data from McKinsey to show current and projected energy demand from data centers in the United States. Data is from October 2023.
U.S. Data Centers Could Quadruple Power Demand by 2030
Today, data centers account for roughly 4% of total U.S. electricity consumption. But by 2030, that share is projected to rise to 12%, driven by unprecedented growth in computing power, storage needs, and AI model training.
In fact, U.S. data center energy demand is set to jump from 224 terawatt-hours in 2025 to 606 terawatt-hours in 2030.
Year | Consumption (TWh) | % of Total Power Demand |
---|---|---|
2023 | 147 | 4% |
2024 | 178 | 4% |
2025 | 224 | 5% |
2026 | 292 | 7% |
2027 | 371 | 8% |
2028 | 450 | 9% |
2029 | 513 | 10% |
2030 | 606 | 12% |
Meeting this projected demand could require $500 billion in new data center infrastructure, along with a vast expansion of electricity generation, grid capacity, and water-cooling systems. Generative AI alone could require 50–60 GW of additional infrastructure.
This massive investment would also depend on upgrades in permitting, land use, and supply chain logistics. For example, the lead time to power new data centers in large markets such as Northern Virginia can exceed three years. In some cases, lead times for electrical equipment are two years or more.
A Strain on the U.S. Grid
The U.S. has experienced relatively flat power demand since 2007. Models suggest that this stability could be disrupted in the coming years. Data center growth alone could account for 30–40% of all net-new electricity demand through 2030.
Unlike typical power loads, data center demand is constant, dense, and growing exponentially. Facilities often operate 24/7, with little downtime and minimal flexibility to reduce usage.
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Electrification
Visualizing China’s Battery Recycling Dominance
In 2025, China will hold 78% of pre-treatment and 89% of refining capacity.

Visualizing China’s Battery Recycling Dominance
Battery recycling is expected to become a cornerstone of the global energy transition as electric vehicles (EVs) and other battery-powered technologies become more widespread.
According to exclusive data from Benchmark Mineral Intelligence, China holds a dominant position in both the pre-treatment and refining stages of battery recycling.
Chinese Growing Dominance
Battery recycling involves two major stages. First is pre-treatment, where recycling begins. Scrap batteries are typically shredded and separated to produce a material known as black mass.
The next stage is refining, which processes black mass into valuable lithium-, nickel-, and cobalt-based chemicals for use in battery cathodes.
China’s scale, infrastructure, and early investments in battery supply chains have translated into an outsized advantage in recycling capacity.
As the largest producer and user of lithium ion batteries, the country is expected to process 3.6 million tonnes of scrap batteries in 2025, up from 1.2 million tonnes in 2022. This would account for 78% of global pre-treatment capacity, with total global capacity projected to exceed 4.6 million tonnes.
Region/Tonnes | 2022 | 2023 | 2024 | 2025P |
---|---|---|---|---|
Global | 1.5M | 2.4M | 2.8M | 4.6M |
China | 1.2M | 1.8M | 2.1M | 3.6M |
Asia excl. China | 158K | 231K | 288K | 361K |
Europe | 118K | 133K | 243K | 416K |
North America | 59K | 165K | 129K | 196K |
ROW | 4K | 6K | 6K | 40K |
In second place is the rest of Asia, with 361,000 tonnes, followed by Europe with 416,000 tonnes. While the U.S. attempts to reduce its reliance on China in the mineral sector, North America accounts for just 196,000 tonnes.
The refining stage is even more concentrated.
China’s black mass refining capacity is projected to nearly triple, from 895,000 tonnes in 2022 to 2.5 million tonnes by 2025—representing 89% of global capacity.
Region/Tonnes | 2022 | 2023 | 2024 | 2025P |
---|---|---|---|---|
Global | 960K | 1.4M | 1.7M | 2.8M |
China | 895K | 1.3M | 1.5M | 2.5M |
Asia excl. China | 48K | 101K | 146K | 225K |
Europe | 13K | 23K | 25K | 28K |
North America | 4K | 5K | 5K | 21K |
ROW | 0 | 1K | 1K | 32K |
Refining is critical, as it converts recycled material into high-purity, battery-grade chemicals. The rest of Asia is expected to refine 225,000 tonnes, Europe 28,000 tonnes, and North America only 21,000 tonnes. Between 2022 and 2025, China’s refining capacity is projected to grow by 179%, while North America’s is expected to surge by 425%—albeit from a much smaller base.
As global demand for EVs and battery storage rises, countries looking to build domestic recycling infrastructure must accelerate investment to reduce dependence on Chinese supply chains.
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