Down 76% in a year, why is the Core Lithium share price getting smashed again today?

Core Lithium and rival ASX 200 lithium miners are deep in the red on Tuesday.

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The Core Lithium Ltd (ASX: CXO) share price is taking a beating today.

Again.

In afternoon trade on Tuesday, shares in the S&P/ASX 200 Index (ASX: XJO) lithium stock are trading for 22 cents apiece, down 6.4%.

That sees the stock down a painful 76% since this time last year.

For some context, the ASX 200 is down 0.4% at this same time.

To be fair, it's not just the Core Lithium share price that's having a day to forget on Tuesday.

Rival ASX lithium miner Pilbara Minerals Ltd (ASX: PLS) shares are down 2.6%, while IGO Ltd (ASX: IGO) shares are down 4.1%, and Liontown Resources Ltd (ASX: LTR) shares are down 6.6%.

So, what's going on?

Why is the Core Lithium share price under pressure again today?

The headwinds battering ASX lithium stocks today come amid an increasingly gloomy mid-term outlook for lithium prices.

The price of the battery critical metal began to rocket in late 2021 and soared to all-time highs in late 2022 as booming EV growth drove a sharp increase in lithium demand.

This in turn saw the Core Lithium share price surge 542% from June 2021 through to November 2022.

But as more supply hit the market, the lithium price fell off a cliff in 2023, tumbling by some 80%. And with the growth of global supplies having now outpaced the growth in global demand, prices remain at three-year lows.

Now lithium supply growth is likely to slow in the medium term. Core Lithium, for example, has temporarily suspended mining operations until market conditions improve.

But it's the even greater slide in demand growth, driven by a marked slowdown in the uptake of EVs in China and the United States, that's likely seeing investors paring their exposure to ASX lithium miners.

China is the world's biggest consumer of lithium, but 2024 saw the nation end its EV subsidies and other incentives for the industry.

The China Passenger Car Association now forecasts China's EV and plug-in hybrid vehicle deliveries to dealers will still increase by 25% in 2024. But that's down from a 36% growth rate in 2023 and a 96% growth rate in 2022.

As for the US, the world's top economy, Gabe Robleto, senior vice president of Kerrigan Advisors noted (courtesy of Forbes):

While EV sales continue to increase, the rate of growth is slowing and EVs are stacking up on dealers' lots, with inventory days-supply nearly double that of [internal combustion engine] vehicles.

Commenting on the slowing growth rate of EVs in the US, Alan Amici, CEO of the Center for Automotive Research said (quoted by NBC News): "I think what you're seeing is the slope changing in how fast people are willing to purchase EVs right now because they're expensive and there is concern about charging infrastructure."

In what appears to be a canary in the coal mine indicator, both Ford and GM are scaling back their investments in EVs.

That bodes poorly for the medium-term outlook for lithium demand growth.

And it could see the Core Lithium share price remain under pressure until market dynamics turn around for the better.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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