S&P/ASX 200 Index (ASX: XJO) lithium shares haven't had an easy time of it recently.
To say the least.
ASX lithium stocks, large and small, have taken a beating amid a massive fall in global lithium prices.
While relatively stable over the past month, the lithium price is down more than 80% since the November 2022 highs, with prices down some 50% over the past six months alone.
With that headwind in mind, here's how these four ASX 200 lithium shares have performed over the past six months:
- Pilbara Minerals Ltd (ASX: PLS) shares are down 26%
- Core Lithium Ltd (ASX: CXO) shares are down 70%
- IGO Ltd (ASX: IGO) shares are down 43%
- Liontown Resources Ltd (ASX: LTR) shares are down 62%
For some context, the ASX 200 has gained 2.7% over this same period.
Those certainly aren't the kinds of results investors want to see.
But the pain for ASX 200 lithium shares may not be over quite yet.
More headwinds ahead for ASX 200 lithium shares?
Much of the pressure on global lithium prices over the past year has come as exploration and mining activity for the battery-critical metal have ramped up. This has seen supplies increase faster than demand growth.
To be clear there's still plenty of growth ahead for the EV industry, and for those ASX 200 lithium shares that can weather the current pullback.
However, in another potential headwind for lithium producers and explorers alike, the growth rate in global EV markets is slowing markedly.
China ends subsidies
China, the world's biggest consumer of lithium, recently ended EV subsidies and other incentives for the industry.
And that looks to already be having a marked impact on the growth outlook for EV sales, potentially impacting the demand for lithium from ASX 200 lithium shares.
According to the China Passenger Car Association (courtesy of Bloomberg), China's EV and plug-in hybrid vehicle deliveries to dealers is forecast in increase to 11 million in 2024. While that's still 25% higher than last year, it represents a slowdown from 36% in 2023 and a whopping 96% in 2022.
But it's not just China's slowing growth figures that could hit ASX 200 lithium shares in 2024.
Supply and demand
"Global EV momentum is stalling. The market is over-supplied versus demand," Morgan Stanley analyst Adam Jonas said (quoted by Reuters).
In the United States, the world's biggest economy, General Motors Co (NYSE:GM) is prepared to adjust its EV goals and potentially boost its planned manufacturing of internal combustion engine (ICE) vehicles.
"It's true, the pace of EV growth has slowed, which has created some uncertainty. We will build to demand," GM CEO Mary Barra said.
GM CFO Paul Jacobson added, "We know the EV market is not going to grow linearly. We are prepared to flex between ICE and EV production."
Tim Piechowski, portfolio manager at ACR Alpine Capital Research, said (quoted by Reuters):
There's no doubt that the limitations – EV charging and the lack of battery resiliency at low temperatures – are causing consumer anxiety.
The reality is that the adoption curve will be slower and there will be pushback to regulators about fuel economy. It'll just be a longer ramp than perhaps was initially anticipated.
It's with that longer ramp in mind that we've recently seen a number of ASX 200 lithium shares reduce their expansion plans. Or, in the case of Core Lithium, even temporarily halt mining operations to conserve cash.
Of course, it is still a growing industry. Just not quite as fast as many investors had been hoping.
