Investing in Lithium Stocks

Lithium companies mine and process lithium into compounds that are critical in the production of electric vehicles, batteries, and grid storage. As such, it's an essential metal in the modern economy. In addition to lithium mining and production companies, QuantumScape develops solid-state lithium batteries for electric vehicles.

Automakers and battery manufacturers accelerated their investment in EVs during the COVID-19 pandemic but then pulled back as relatively high interest rates constrained auto sales, including those of EVs. The resulting oversupply of lithium led to a sustained decline in the lithium carbonate price, which continued through 2023 and into 2025.

Even with the oversupply, ongoing battery demand from EVs and energy storage (saving power for later distribution to the electric grid) has some investors anticipating a solid recovery in lithium demand in the next few years.

That said, automakers have scaled back their EV investment plans in response to sluggish auto sales, and the stability in the price of lithium over the last couple of years suggests the market is in balance right now.

Sociedad Quimica y Minera (SQM) is one of the world's largest producers of lithium used in batteries and other energy storage technologies.

Its two major shareholders are Chile's Pampa Group (a mining company), owning 26%, and China's Tianqi (an EV battery metal processor), owning 22%.

The company is currently highly reliant on Chilean resources, and it remains to be seen how state control of lithium will affect SQM's ability to generate a profit.

SQM predicts that demand for lithium will outpace supply over the long term, so it has been investing in increasing its production capacity. With recent improvements now complete, the company claims it will be able to increase its market share in supplying lithium, mainly for EV batteries.

2. Albemarle

Mining and chemical producer Albemarle is leading the charge in global lithium output. Among the company's biggest customers is Panasonic (OTC:PCRFY), which manufactures lithium batteries for everything from small consumer electronics to EVs. Samsung (OTC:SSNL.F) and Corning (GLW +1.83%) are also significant customers.

Although lithium prices can be volatile and will ultimately guide the direction of Albemarle's sales, the company has proven itself over the years to be a durable mining operation that can bring lithium to market.

The company swung to a net loss of $1.2 billion in 2024 (and Wall Street expects another loss in 2025) due to the collapse in lithium prices. Management is reacting by cutting capital expenditures and other costs to solidify its balance sheet while waiting for an upturn in the lithium market.

It's an excellent place to start if you are looking for exposure to the upside potential of lithium carbonate prices, but investors will need to be patient and have the stomach to tolerate short-term bad news.

The Australian company's primary activity is offering "pit-to-ship mining services" to resource companies. At the same time, it utilizes its expertise in mining services to develop its own acquired assets in iron ore and lithium. It's a relatively diversified model in the commodity world, with the more stable income from services offsetting the weakness in its own mining activities when the prices of lithium or iron ore are weak.

While that might reduce the downside risk, it also means the company isn't quite as exposed to the rising price of lithium as more conventional miners.

4. QuantumScape

QuantumScape is developing a solid-state lithium-metal battery for EVs that its management believes will lead to a step change in battery technology when compared to the lithium-ion batteries currently used by Tesla and other EV automakers. According to QuantumScape's SEC filings, the new battery it's developing will offer superior "energy density, faster charging, and enhanced safety."

Investors are hoping QuantumScape's longtime partnership with Volkswagen (which includes $380 million in investment) will lead to the commercial utilization of its batteries in Volkswagen and other car companies.

6. Lithium Americas 

Legacy automakers have big plans to electrify their vehicle lineups in the coming years, which means millions of new EVs could be sold. The potential trend has led to a big jump in smaller, more speculative lithium stocks such as Canada-based Lithium Americas.

Lithium Americas currently doesn't generate any revenue. The value of the company lies in its joint venture with General Motors (GM +4.20%) to fund, develop, construct, and operate a commercial mine and chemical manufacturing operation in Thacker Pass, Nevada.

The company expects to complete Phase 1 of the project in late 2027, with an expectation of producing 40,000 tonnes per year of battery-grade lithium. As such, investors are hoping demand will pick up in time for the start of the project. Lithium Americas is a highly speculative stock that will attract enterprising investors, but most investors will want to tread lightly with these speculative bets.

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