April 12, 2024

Lithium Hydroxide Market is Expected to be Driven by Growing Adoption of Electric Vehicles

The global lithium hydroxide market is the production of lithium hydroxide, a compound that is commonly used in lithium-ion batteries. Lithium hydroxide is a white inorganic compound that is soluble in water and less so in ethanol. It is used in various applications like air conditioners, mobile phones, power tools, and electric vehicles. The rising adoption of electric vehicles represents a major opportunity for the lithium hydroxide market as lithium hydroxide is used in the manufacture of lithium-ion batteries that power electric vehicles.

The global lithium hydroxide market is estimated to be valued at US$2.13 billion in 2024 and is expected to exhibit a CAGR of 8.4% over the forecast period 2024 to 2031, as highlighted in a new report published by Coherent Market Insights.

Market Dynamics:

The growing adoption of electric vehicles is driving the lithium hydroxide market. As mentioned in the heading, lithium hydroxide is used in the manufacture of lithium-ion batteries that power electric vehicles. With governments around the world promoting adoption of electric vehicles to reduce emissions, demand for lithium hydroxide is increasing from the automotive sector. Another key driver is the increasing use of consumer electronics. Lithium hydroxide based batteries are widely used in consumer electronic devices such as smartphones, laptops, power tools etc. This is fueling the demand for lithium hydroxide over the forecast period.

Segment Analysis

The lithium hydroxide market is dominated by battery-grade lithium hydroxide segment. It accounted for over 70% share in 2020 owing to increasing demand for lithium-ion batteries from electric vehicles and energy storage applications. Industrial-grade lithium hydroxide finds application in air conditioning, pharmaceuticals, lubricants etc. However, demand for industrial-grade is relatively lower compared to battery-grade.

PEST Analysis

  • Political: Stringent regulations regarding emissions from automobiles are promoting adoption of electric vehicles. This is positively impacting demand for lithium-ion batteries and thereby lithium hydroxide. Countries are offering subsidies for electric vehicles purchase.
  • Economic: Declining battery prices and cost of renewable energy is making electric vehicles and energy storage more viable financially. Developing economies in Asia Pacific are witnessing faster economic growth rate driving sales of consumer electronics using lithium-ion batteries.
  • Social: Rising environmental concerns among public regarding pollution from gasoline cars is encouraging shift towards electric vehicles. Rapid urbanization is improving access and infrastructure for electric mobility.
  • Technological: Continuous research and development is enhancing lithium-ion battery performance in terms of life cycle, range and charging time. This is catalyzing demand from automotive and consumer electronics sectors. Development of newer lithium-ion battery chemistries is reducing cobalt content requirement.

Key Takeaways

The global lithium hydroxide market is expected to witness high growth. The global lithium hydroxide market is estimated to be valued at US$2.13 billion in 2024 and is expected to exhibit a CAGR of 8.4% over the forecast period 2024 to 2031.

Regional analysis comprises Asia Pacific dominates the market currently owing to presence of large consumer electronics and electric vehicle manufacturing base in China, South Korea and Japan. China has emerged as the largest lithium hydroxide consumer due to large EV market. Key players operating in the lithium hydroxide market are FMC, SQM, Albemarle, Tianqi Lithium and Livent.

Key players analysis FMC is one of the largest lithium producers globally, positioned well in brine resources. Albemarle is a leading producer of lithium chemicals including lithium hydroxide and has significant mineral resources. Tianqi Lithium has integrated operations and is a major lithium carbonate and lithium hydroxide supplier in China. Livent has a global footprint and its lithium hydroxide is used in cathode materials. The strong demand from the electric vehicle sector especially in China is expected to drive the lithium hydroxide consumption in coming years.