The electric vehicle revolution was supposed to create fortunes for companies that mine and process battery materials. Lithium, nickel, cobalt, and graphite became the new oil, at least in the investor pitch decks and analyst reports that circulated during the EV boom years. But the market has shifted. Prices have dropped. And suppliers across North America are now facing a reality considerably harsher than the projections suggested.
Battery material producers from Nevada to Quebec are reporting significant pricing pressure as oversupply, softer EV demand, and aggressive competition from Chinese refiners combine to squeeze margins. Some companies have delayed expansion projects. Others have laid off workers or shuttered operations entirely. The mood at industry conferences has turned from exuberant to cautious, with executives choosing words carefully when discussing near-term outlooks.
“The fundamentals haven’t changed,” said James Callahan, CEO of a lithium processing company based in Nevada. “The world still needs these materials for the energy transition. But the timeline has stretched, and the competition has intensified. We’re in a trough, and nobody knows exactly how long it lasts.”
Lithium prices tell the starkest story. After peaking at historic highs in late 2022, prices have fallen roughly 80 percent. Lithium carbonate that once traded above $80,000 per metric ton now sells for closer to $15,000. The decline reflects both increased supply from Australia and South America and weaker-than-expected demand from EV manufacturers adjusting production targets. Producers who built business plans around higher prices are scrambling to cut costs.
Albemarle, the largest lithium producer in the Western Hemisphere, announced restructuring measures earlier this year that included layoffs and delayed investments. The company emphasized its long-term confidence in the market while acknowledging near-term headwinds. Smaller producers with less financial cushion have faced tougher choices. At least three junior mining companies with North American projects have filed for creditor protection since last summer.
Nickel and cobalt have followed similar trajectories. Indonesian nickel production, much of it backed by Chinese investment, has flooded global markets and pushed prices to multi-year lows. Cobalt, once the most geopolitically fraught battery material due to its concentration in the Democratic Republic of Congo, has seen prices cut in half from recent peaks. North American suppliers who hoped to offer an ethical and secure alternative have struggled to compete on cost.
“We can’t match Indonesian nickel prices,” said a mining executive in Ontario who spoke on condition of anonymity because of ongoing contract negotiations. “Our labor costs are higher, our permitting timelines are longer, and our environmental standards are stricter. All of those things arguably make our product better, but buyers are looking at spreadsheets.”
The Chinese dimension of the pricing pressure is impossible to ignore. Chinese companies dominate the global battery supply chain, controlling the majority of lithium refining, graphite processing, and cathode production. That dominance gives Chinese producers significant pricing power. When demand softens, they can absorb losses longer than Western competitors. When demand rebounds, they capture the upside first.
The Inflation Reduction Act, passed in 2022, attempted to address this imbalance by requiring that EV batteries contain increasing percentages of materials sourced or processed in North America or allied countries. The law created incentives for domestic production and penalized reliance on Chinese supply chains. But building mines and processing facilities takes years, and the price collapse has made financing those projects considerably harder.
“The IRA was supposed to be a signal to invest,” said Rebecca Montoya, a partner at a private equity firm that focuses on energy transition assets. “And it was, briefly. Money flowed into battery material projects. But capital markets respond to price signals too. When lithium drops 80 percent, investors get nervous regardless of what the policy environment looks like.”
Several high-profile projects have stalled. Ioneer’s Rhyolite Ridge lithium-boron project in Nevada, once seen as a cornerstone of domestic supply, has faced permitting delays and financing challenges. Piedmont Lithium’s North Carolina project has encountered community opposition and regulatory hurdles. Talon Metals’ nickel project in Minnesota remains in development but has pushed back production timelines. The pipeline of new North American supply looks thinner than it did two years ago.
Graphite presents its own challenges. China processes more than 90 percent of the world’s natural graphite and produces the majority of synthetic graphite used in battery anodes. North American alternatives are scarce. A handful of projects in Canada and one in Alabama are under development, but none have reached commercial production. The IRA’s restrictions on Chinese graphite, scheduled to tighten in coming years, have created uncertainty for automakers trying to secure supply chains.
I spoke with a procurement director at a major automaker who described the situation as a strategic puzzle. “We want to comply with the IRA and qualify for tax credits,” she said. “But the materials we need aren’t available in sufficient quantities from approved sources. We’re signing offtake agreements with companies that haven’t built their facilities yet. That’s not a comfortable position.”
The offtake agreements themselves have become a point of tension. Battery material suppliers typically seek long-term contracts with automakers to secure financing for new projects. But automakers, facing their own demand uncertainty, have grown reluctant to commit to fixed volumes and prices years in advance. The mismatch has left projects stranded between willing sellers and hesitant buyers.
Some suppliers have pivoted strategies. Rather than pursuing pure-play mining or refining, companies are seeking joint ventures with automakers or battery manufacturers who can provide both capital and guaranteed demand. Ford’s partnership with SK On for battery production and GM’s investment in Lithium Americas represent this model. The risk shifts from the supplier to the integrated partnership, which can absorb price volatility more easily.
Recycling has emerged as a potential relief valve. As the first generation of EV batteries reaches end of life, materials recovered through recycling could supplement mined supply and reduce reliance on volatile commodity markets. Companies like Redwood Materials and Li-Cycle have built facilities to process spent batteries and manufacturing scrap. But recycling volumes remain small compared to primary production, and scaling up depends on a steady stream of batteries to recycle that won’t materialize for several more years.
The labor implications of the pricing pressure have been significant. Mining and processing jobs in battery materials were supposed to replace some of the employment lost as internal combustion engine production winds down. Communities in mining regions welcomed the investment and the promise of long-term work. When projects stall or scale back, those communities feel the disappointment acutely.
“We were told this was the future,” said a county commissioner in a rural Nevada district where a lithium project has paused development. “People turned down other opportunities because they thought good jobs were coming. Now they’re not sure what’s happening. That erodes trust.”
Industry analysts remain divided on how long the pricing pressure will last. Bulls argue that EV adoption will eventually accelerate, supply discipline will tighten, and prices will recover. They point to long-term demand projections that still show massive growth in battery materials consumption over the next two decades. Bears counter that Chinese oversupply is structural, that EV demand forecasts have consistently proven optimistic, and that prices may stay depressed for years.
“The market will balance eventually,” said Simon Moores, CEO of Benchmark Mineral Intelligence. “But the path from here to there is brutal for high-cost producers. Not everyone survives the trough.”
The policy response has been limited so far. The Biden administration supported domestic battery supply chain development through the IRA and related programs, but did not directly address the pricing dynamics that have undermined project economics. The current administration has shown less focus on EV supply chains, leaving companies to navigate market conditions largely on their own.
Some industry voices have called for additional measures, including tariffs on Chinese-processed materials or direct subsidies for domestic producers. Others warn that such interventions could raise costs for automakers and consumers, slowing EV adoption and ultimately hurting the same suppliers they’re meant to help. The policy debate remains unresolved.
For now, battery material suppliers in North America are hunkering down. Cost-cutting has become the priority. Expansion plans have moved to the back burner. Companies are conserving cash and waiting for conditions to improve. The optimism of the boom years has given way to a harder-edged realism about how long the energy transition might take and how painful the journey could be.
The materials that power electric vehicles remain essential. That part of the story hasn’t changed. But the companies that extract and process those materials are discovering that being essential doesn’t guarantee profitability. The road from here to a stable, profitable, North American battery supply chain runs through territory that nobody fully mapped and few anticipated would be this difficult to cross.
