The Core Lithium Ltd (ASX: CXO) share price has been one of the worst performers on the ASX 200 on Wednesday.
In afternoon trade, the lithium developer's shares are down 14% to 86.5 cents.
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Why is the Core Lithium share price being hammered?
The selldown of the Core LIthium share price has been driven by broad weakness in the lithium industry today, which is being felt hardest among developers rather than producers.
For example, lithium developer, Lake Resources N.L. (ASX: LKE), which also joined the ASX 200 this week with Core Lithium, is down materially today along with Argosy Minerals Limited (ASX: AGY), Liontown Resources Limited (ASX: LTR), and Sayona Mining Ltd (ASX: SYA).
What's behind the weakness?
Investors appear to have been selling lithium shares on Wednesday amid news that Germany is planning to defy the European Union by backtracking on future plans to ban internal combustion engine (ICE) cars.
The Financial Times reports that Germany's finance minister, Christian Lindner, has rejected plans for the ban on the sale of new petrol and diesel cars by 2035. This could have a major impact on the number of electric vehicles on European roads in 2035, especially if other countries follow its lead.
Less electric vehicles mean less demand for the lithium that goes into their batteries. And given that there are already concerns floating around about increasing supply of the battery making material, this may not bode well for long term lithium prices.
Though, a lot can certainly change between now and then.
