The Gravity of Cost Curves
What we’re witnessing with batteries is classic disruption economics. Costs fall as production scales, and that falling cost triggers more adoption, which then drives costs even lower. It’s a self-reinforcing cycle that turns slow change into an avalanche. “Cost curves are like gravity — once they start falling, they don’t stop, they plummet.”
The data speaks for itself:
- 2014 → ~$700/kWh (BloombergNEF)
- 2024 → <$150/kWh (IEA)
- LFP (Lithium Iron Phosphate, a safer, lower-cost lithium-ion chemistry) already flirting with $50–60/kWh at the cell level (Benchmark Mineral Intelligence)
This isn’t incremental change. It’s exponential collapse. And when the economics flip, adoption doesn’t creep — it explodes. Costs fall, installations go vertical. That’s the hallmark of disruption.
Figure 1: Battery storage is riding the cost curve down. As LFP-led pack prices collapsed from ~$700/kWh in 2014 to just ~$66/kWh by 2025, global BESS installs exploded from almost nothing to ~85 GW per year. The link is crystal clear: cheaper batteries unlock exponential storage growth.
EV & BESS Adoption S-Curves
Figure 2: The EV adoption curve follows a classic S-shape, with growth accelerating after the 5% tipping point.
Figure 3: BESS is now following its own S-curve, with growth accelerating rapidly as costs fall and renewable integration demands scale.
Figure 4: EV and BESS adoption S-curves compared directly, highlighting their parallel acceleration.
Together, the EV and BESS S-curves illustrate a powerful narrative: transportation and energy storage are not isolated trends but parallel revolutions. EVs pulled costs down through scale, and now BESS is climbing the same trajectory. This dual acceleration locks in lithium as the critical enabler of the clean energy future.
Demand Explosion
The pace of adoption underscores the point:
- In 2020, ~3 million EVs were sold worldwide (IEA).
- In 2025, we’re on track for 21 million (CAAM / IEA).
- That’s a 7× surge in just five years — with no slowdown in sight.
On the grid side, BESS installations are now surging to catch up. Once marginal, BESS is quickly becoming the second great pillar of lithium demand — firming renewables, replacing peaker plants, and driving utility-scale adoption.
EVs led the charge and pulled costs down through scale. Now BESS is accelerating on the same curve, retracing solar and wind’s playbook: once subsidized, now competitive, and heading toward dominance. Together, EV + BESS represent a one-two punch of exponential demand — both bound by the same gravity of cost curves.
Figure 5: EV sales are scaling like never before. From ~3m units in 2020 to ~21m in 2025, the curve is going vertical. Alongside, annual BESS deployments jumped from single digits to over 100 GWh. Together they form the twin engines of lithium demand. Unlike Figure 4, which highlights relative adoption dynamics, this chart shows the absolute demand volumes being added.
Supply Side Reality
Figure 6: Chinese lithium giants reported heavy H1 2025 losses, highlighting unsustainable margins.
Chengxin Lithium: H1’25 net loss ¥841m 💸 (Company filing)
Yongxing Lithium: H1’25 net loss ¥150m 📉 (Company filing)
Ganfeng Lithium: H1’25 net loss ¥913m 🔻 (Company filing)
Tianqi Lithium: H1’25 net profit down 98% YoY 🩸 (Company filing)
Margins have collapsed. Revenues are falling. Producers cannot sustain losses forever. Any lower than the May 26, 2025 GFEX bottom (~¥60k/tonne) and supply starts cracking. Mines close, projects defer, and investment freezes — setting up the deficit.
The Imminent Lithium Squeeze
Figure 7: My aggressive (bull) projection for BESS growth — surging toward ~10 TWh cumulative by 2030.
Figure 8: My high-case (bull) EV projection — from ~3 million in 2020 to ~57 million by 2030.
Figure 9: My disruption-driven (bull) EV + BESS demand vs. LCE supply projection. Supply runs ahead through 2025, but a structural deficit opens from 2026 onward.
Lithium supply is still running ahead of combined EV + BESS demand until 2025. The true squeeze begins in 2026, when adoption curves steepen and supply growth flattens. From that point forward, every year widens the gap unless new mines and refineries clear financing, permitting, and qualification hurdles.
These are my own disruption-driven projections — deliberately aggressive, built on the gravity of cost curves, the speed of S-curve adoption, and the compounding force of exponential demand. By 2030, EV sales reach ~57m annually and BESS surges to ~10 TWh cumulative. Even with recycling and sodium-ion easing the load at the edges, lithium demand dwarfs credible supply forecasts. The deficit is not a question of if, but when — and 2026 is the line in the sand.
Achieving this pathway assumes steady permitting, policy stability, and capital flow into refining capacity. But the direction is clear: cost curves ensure demand keeps compounding.
This isn’t another short boom-bust. Passenger EV adoption is only being held back in some markets by irrational opposition, and BESS, wind, and solar face the same — political, cultural, or legacy-industry resistance. But those obstacles crumble as costs fall. Economics always win. Prices will still oscillate, but the trajectory is set: tighter, higher, and more volatile as demand runs ahead of supply.
Forward View: 2025 → 2035
Disruption-Driven Outlook (my projection, not consensus):
The lithium squeeze begins in 2026 and deepens into the early 2030s. EV and BESS adoption compound on steep S-curves, while supply additions grind through the slow gears of financing, permitting, and qualification. This is the classic collision of exponential demand with linear supply.
2026–2028 — The Crunch Years:
Demand finally outruns supply. Deferred projects stay shelved, higher-cost operations shut in, and prices re-rate sharply into the incentive band. Offtakes tighten, OEMs scramble to lock in long-term contracts, and governments lean harder into critical mineral strategies. The squeeze becomes visible across every supply chain.
2029–2031 — Structural Tightness:
New supply begins trickling in, but demand growth is faster. Prices stay volatile, consolidation accelerates, and more upstream–downstream integration takes hold. Recycling contributes in the mid-teens %, sodium-ion scales at the low end, but neither dents the dominance of lithium for high-energy applications.
2032–2035 — Partial Relief, Not Resolution:
Greenfield projects and refining expansions finally scale, easing the most acute tightness. Yet lithium remains the anchor chemistry for transport, storage, robotics, and AI infrastructure. Supply expands, but the exponential baseline of demand keeps markets tighter and more volatile than legacy cycles ever were.
Conditions:
This trajectory assumes stable permitting regimes, sufficient capital allocation, and no major geopolitical choke points. Even so, the asymmetry is stark: delays on supply are routine, while demand accelerates on autopilot once cost curves flip.
The Line in the Sand:
2026 is not just another cyclical inflection — it’s the pivot into a structurally tight decade. Economics, not policy, drive it. The squeeze doesn’t end with one price spike; it persists until the mid-2030s, when supply finally converges with the compounding curves of EVs and BESS.
Cycles and the Road Ahead
Lithium’s past cycles — hype, crash, rally, correction — were just warm-ups. The next phase is different. EVs and BESS are compounding on steep S-curves, driving exponential demand while supply remains linear and constrained.
By 2030, demand surges past 7–9 Mt LCE, triple today’s levels. Recycling will help, and sodium-ion will find niches, but neither displaces lithium at the core of high-energy transport and storage.
2026 marks the flip: surplus turns to structural deficit. From there, prices won’t just swing — they’ll climb tighter, higher, and more volatile as adoption races ahead of supply. This isn’t another boom-bust. It’s the squeeze that defines the decade.