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Lithium's market value will triple if U.S. hits 50% EV goal by 2030 - Bank of America

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(Kitco News) - Growing demand for electric vehicles (EV) will provide some upside risk to lithium prices. Still, just as importantly, the battery metal is on the cusp of transforming into a mainstream commodity from a specialty metal, according to analysts at Bank of America.

In a recent report, analysts at the Bank of America noted that the lithium market is on its way to being more balanced as renewed demand has reduced overhanging supply and drive prices up from the lows seen earlier this year.

Bank of America's bullish outlook on the battery metal comes a few days after President Joe Biden hosted an electric vehicle summit at the Whitehouse as part of his plan to rebuild the nation's infrastructure.

Biden signed an Executive Order setting an ambitious new target to make half of all new vehicles sold in 2030 zero-emissions vehicles, including battery-electric, plug-in hybrid electric, or fuel cell electric vehicles. The Executive Order also kicks off the development of long-term fuel efficiency and emissions standards.

"The President believes it is time for the U.S. to lead in electric vehicle manufacturing, infrastructure, and innovation," the Whitehouse said in a statement.

Analysts at Bank of America said that if the government's 50% target is reached, global lithium demand may hit 2.1 million tonnes in that year, up compared to their base case of 1.8 million tonnes.

"These demand additions imply a risk that the market value of lithium could rise from $6B at present to $36B by 2030. Of course, this would also mean that lithium's status may change from a specialty raw material to a mainstream commodity," the analysts said.

Although the future looks bright for lithium, the analysts added that the market is not without risks, especially if production picks up.

"Given the exponential demand growth, it is not surprising that production is reacting," the analysts said. "The lithium market depends on production discipline. Indeed, if miners increased output to nameplate capacity, the lithium market runs the risk of being materially oversupplied in the coming years."

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