ASX lithium shares are in the red today despite 2025 EV prediction

Electric vehicles might be cheaper sooner than expected.

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The market is taking a break from pushing ASX-listed lithium shares higher on Monday. A few notable lithium producers in the S&P/ASX 200 Index (ASX: XJO) are in the red today. This is despite optimistic projections being shared for electric vehicles (EVs) at the Australian Financial Review‘s 2021 infrastructure summit.

Presently, some of the worst-performing companies in the materials sector today include lithium names. Specifically, Orocobre Limited (ASX: ORE) and Pilbara Minerals Ltd (ASX: PLS) finished the day down 3.57% and 2.97% respectively.

Today’s positive remarks were shared by the CEO of EV fast-charging company Tritium.

Let’s unpack what was said.

What’s making news in ASX lithium shares today?

ASX lithium shares have grown to be highly topical in 2021. As the green push continues, bolstered by research indicating plenty of runway for growth in EV adoption, the material that lends itself to battery production has become increasingly valuable.

However, share price momentum in lithium companies has mostly slowed since August. Since then, many ASX-listed lithium shares have traded sideways, awaiting the next catalyst – for better or for worse. It seems comments from Tritium CEO Jane Hunter weren’t enough to spur the sector forward today.

At the AFR’s infrastructure summit, Hunter highlighted the forecast of electric vehicles being cheaper than internal combustion vehicles by 2025. This would represent a significant milestone for the EV industry, as it seeks to gain widespread adoption.

Speaking on the potential turning point, Hunter said:

BloombergNEF is saying 2025 for light vans and 2026 for passenger vehicles and SUVs. If you think of the battery as the single most expensive part of the EV… It has been at 50% of the cost of the EV in 2016. I think that it’s coming down and it’s closer to 30% now.

Notably, BloombergNEF’s Electric Vehicle Outlook 2021 report suggests passenger EV sales will increase from 3.1 million in 2020 to 14 million in 2025. Such a spike in demand over a short period has resulted in many investors flocking to ASX lithium shares, expecting to cash in.

Could hydrogen be stealing some of the thunder?

As we covered earlier today, Fortescue Future Industries (a subsidiary of Fortescue Metals Group Limited (ASX: FMG)) has managed to produce the world’s first hydrogen-powered mining truck. The company plans on ushering in an age of plentiful green hydrogen-use cases, which might mean competition against battery electric vehicles.

At this stage, hydrogen is more expensive to produce. However, if Fortescue Future Industries manages to reduce this cost, perhaps the future demand for lithium could be less than expected.

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