Allkem Ltd (ASX: AKE) shares marched higher today. Allkem shares closed the session on Tuesday at $12.05, up 0.42%.
The S&P/ASX 200 Index (ASX: XJO) lithium share is among the biggest and lowest-cost lithium producers in the world. As such, it's been a big beneficiary of soaring lithium prices.
Prices for the lightweight conductive metal remain up by more than 400% since this time last year amid strong growth in demand for critical battery materials as global electric vehicle (EV) production continues to surge.
Which brings us to the latest development out of the United States that could fuel even stronger demand for EVs, and offer another tailwind for Allkem shares.
Image source: Getty Images
United States spending bill could energise ASX lithium shares
Yesterday (overnight Aussie time) the US Senate passed a US$437 billion bill focused on healthcare and climate change.
Around US$347 billion is earmarked for climate and energy spending.
Of most relevance to Allkem shares, the bill ends the per-manufacturer limits on the US$7,500 tax credit for the purchase of new EVs that was previously in place.
Once it passes the House and is signed off by President Joe Biden, as is widely expected, the bill will take effect in January and run for a decade.
As Electrek reported, the EV credit previously had a cap of 200,000 cars per manufacturer. Tesla Inc, General Motors Company and Toyota had already exceeded the cap, with other EV manufacturers soon to follow.
Allkem shareholders may be interested in the part of the bill that requires "critical minerals" for EV batteries to either be sourced within the US or from a nation with a free trade agreement with the US.
That excludes China, which has long been the world's major supplier of critical battery elements. And it could open the door for more lithium and other mineral imports from Australian miners.
How have Allkem shares been performing?
Allkem shares are up 29% over the past full year. This compares to a 12-month loss of 7% posted by the ASX 200.
Longer-term, the Allkem share price has leapt 294% over the past five years.
