UBS Forecasts Lithium's Third Super-Cycle, Lifts Price Outlook by 74% on Surging EV and Storage Demand
In a major reassessment of the critical battery metal's trajectory, analysts at UBS have declared that lithium is poised for its third major pricing super-cycle, raising their long-term price forecasts by a striking 74%. The move signals growing conviction that structural demand will continue to outpace supply responses for years to come.
The bank's updated model projects global lithium demand to grow 14% in 2026 and 16% in 2027. This acceleration is fueled by a robust rebound in electric vehicle sales and, more significantly, a dramatic policy-driven surge in battery energy storage system (BESS) investments, particularly in China. By 2030, total demand is expected to double, reaching approximately 3.4 million tonnes, and maintain a 13% compound annual growth rate through 2035.
"Electric vehicles are now on the cusp of achieving what we call 'triple parity'—cost, range, and charging time," explained UBS analyst Lachlan Shaw. "Our research shows battery cell costs have halved, which should catalyze a new wave of EV adoption later this decade, despite some near-term policy headwinds in markets like the U.S."
A pivotal factor in the revised outlook is China's recent overhaul of its energy storage pricing mechanism. This policy shift has led UBS to drastically increase its BESS demand projections. The sector is now expected to consume 42% of global lithium by 2035, a monumental leap from just 8% in 2020, transforming it from a niche market into a primary demand driver.
On the supply side, while 2025 saw an 18% increase in production, it failed to keep pace with consumption, leading to market deficits and the drawdown of existing inventories. UBS anticipates a more substantial supply response will only begin to materialize from 2027 onward. Consequently, the analysts warn that the era of heightened price volatility for lithium is far from over, with tight market conditions likely to persist.
Market Voices
Eleanor Vance, Portfolio Manager at GreenRock Capital: "This isn't just a cyclical bounce; it's a validation of the long-term energy transition thesis. The storage demand figure is the real story—it provides a massive, non-automotive floor for the market."
Dr. Aris Thorne, Resource Economist at Global Institute of Technology: "The forecasts are plausible, but hinge critically on Chinese policy stability and the speed of new extraction technologies. The 2027 supply inflection point is the key variable everyone should watch."
Marcus Feld, independent mining consultant: "Here we go again—banks talking up a 'super-cycle' to justify bullish calls. They gloss over the demand destruction high prices cause and the flood of new projects in the pipeline. This feels like a set-up for retail investors to get burned when the music stops."
Li Wei, Strategy Head at a Shanghai-based Battery Manufacturer: "The UBS report confirms what we see on the ground. Securing long-term, stable lithium supply is now our top strategic priority, even above cobalt or nickel. The competition for resources is intensifying by the month."