Worldwide BESS, EV Markets Bode Well for Lithium Demand

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Written by Paul Wiseman for IIR News Intelligence (Sugar Land, Texas)

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Summary

After almost four years of doldrums, lithium prices in January of this year have surged, as world demand for industrial-grade BESS surpasses EVs for lithium demand. This is Part III of a series.

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Lithium Returns from the Dark

Of all the substances considered critical in transitioning from storing energy as combustible molecules in a tank to stashing it as electrons in a box, lithium gets the most press. While others are vital in tiny amounts to enable connections and for other tasks, lithium is needed in large quantities because it does the heavy lifting--it's where the collected electrons actually park.

As with any market, the supply/demand balance determines pricing. Over the last few years lithium has suffered boom-bust cycles much akin to those of oil and gas. After reaching major highs in 2022, prices for lithium crashed for about four years due to oversupply. Only since the first of 2026 have prices begun to revive. As seen in previous stories in this series, China is a major driver of both supply and demand.

Battery energy storage systems (BESS) in the U.S., China and elsewhere also are growing to meet the demands required by intermittent renewables like wind and solar. For more on BESS growth, see February 5, 2026, article - Industrial Info: Global BESS Projects Top $1.28 Trillion.

China's Lithium Demand Growth

As reported in part II of this series, Two Roads Diverge: U.S., China Head in Opposite Directions on EV Adoption, China leads the world in electric vehicle (EV) adoption, and is even now planning to export them to Canada.

According to the Chinese Energy Storage Alliance (CNESA), new-type energy storage, including mostly BESS as opposed to hydroelectric, accounted for more than two-thirds of China's power storage capacity of 213.3 gigawatts (GW) at the end of 2025. CNESA expects large-scale commercial projects and others to maintain a high pace of installation--and lithium demand--for the foreseeable future.

This demand is pumping up lithium prices in China, which also is among the world's top producers of the metal. For example, on January 27, Fastmarkets' daily domestic-market spot price for lithium carbonate (99.5% Li2CO3 minimum) was more than twice the early October 2025 prices.

China's Exports Also Rise

China also is deep into the international BESS market, according to a February 10 Reuters article. The nation sold $66 billion of such systems in the first 10 months of 2025, along with about $54 billion in EV exports. Its January, an agreement with Canada to export 49,000 EVs at a greatly reduced tariff rate (6.1% compared to the previous 100%) opens a new market for China. As part of that agreement, China will also reduce its tariffs on Canadian canola seed.

Demand Expected to Rise

As seen in the rise of lithium prices in China already this year, that trend is expected to spread globally, according to market observers quoted by Reuters. Morgan Stanley was quoted as predicting a worldwide shortage of 80,000 metric tonnes of lithium carbonate equivalent (LCE) in 2026. UBS said it expected a smaller deficit of 22,000 metric tonnes. Once final 2025 tallies are in, UBS forecasted it will show a surplus of 61,000 metric tonnes.

Where It Comes From

Four nations account for most of the world's lithium production, with the top two producing 70%: Australia, Chile, China and Argentina. Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Plant Database can view the plant profiles of operational lithium mines in these countries.

For related information, see January 12, 2026, article--Lithium Argentina Eyes Two Major Project Kickoffs in 2026, two significant new mines are in the works in Argentina.

U.S. Lithium Growth

While the U.S. is far down the current production and processing list, many are looking at changing that situation. The Trump administration recently announced a plan to stockpile lithium and others. For more on this, see February 10, 2026, article - Trump Announces $12 Billion Plan to Stockpile Critical Minerals.

Industrial Info is tracking 64 active capital lithium mine projects in the U.S., valued at $46.62 billion. GMI subscribers can view a list of detailed project reports.

A number of companies are investing in extracting lithium from saltwater in the Smackover Formation of southern Arkansas and northeast Texas.

Also, Tesla recently opened a huge lithium hydroxide refinery in Robstown, Texas, in recent weeks.

Big Picture

Lithium's future revolves mostly around the world's dedication to an energy transition, which means geopolitics are a key factor. Many nations, including the U.S., have backpedaled some, with China as the world's current main forward-driving force.

Key Takeaways

• Whatever happens to EVs, large-scale commercial projects such as battery electric storage systems (BESS) for data centers are on the rise--and demanding more and more lithium.
• But EVs are not going away--they are on the rise in China and many other nations, further raising lithium demand.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).