ASX lithium stocks are increasingly in the spotlight as we roll towards the end of the year, with brokers paying close attention to the space.
Talk of electric vehicle (EV) demand expanding and analysts tipping a brighter outlook for lithium prices in 2025 are direct contrasts to this time 12 months ago.
Consequently, analysts at Macquarie have upgraded the firm's outlook on three prominent ASX lithium stocks to buy ratings.
These are Atlantic Lithium Ltd (ASX: A11), Piedmont Lithium Inc (ASX: PLL), and Sayona Mining Ltd (ASX: SYA). Let's take a closer look
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Lithium market and EV outlook: What's driving the rebound?
Lithium prices have taken a beating this year, sliding from highs of CNY 116,500 in May to lows of CNY 71,500 in October.
Part of this was driven by a global oversupply and weak demand for EVs.
But, according to Goldman Sachs, the long-term demand for lithium remains intact, driven by the global EV boom. Part of this stems from the lower cost of batteries (note: all dollar figures below in USD):
Global average battery prices declined from $153 per kilowatt-hour (kWh) in 2022 to $149 in 2023, and they're projected by Goldman Sachs Research to fall to $111 by the close of this year.
Our researchers forecast that average battery prices could fall towards $80/kWh by 2026, amounting to a drop of almost 50% from 2023, a level at which battery electric vehicles would achieve ownership cost parity with gasoline-fueled cars in the US on an unsubsidised basis.
Meanwhile, analysts at UBS expect spodumene prices, a key lithium raw material, to rise 17% in 2025.
Why Macquarie is bullish on these 3 ASX lithium stocks
Macquarie analysts are equally as bullish on the sector, according to The Australian, rating plenty of ASX lithium stocks a buy in a note to clients this week.
The first is Atlantic Lithium. The company's Ewoyaa Lithium Project in Ghana recently secured a Mine Operating Permit.
With this regulatory milestone achieved, construction of the mine and processing plant is one step closer to reality.
Atlantic is partners with Piedmont Lithium in the project.
Speaking of Piedmont, Macquarie rates it a buy as well from today. The company's North American Lithium (NAL) project set new quarterly records for production and mill utilisation in the three months ending September 30.
According to Piedmont CEO Keith Phillips, the company still managed industry-leading price realisations during the quarter despite the industry "remaining challenging".
Macquarie also rated small-cap lithium player Sayona Mining a buy this week.
Just to clarify, Sayona is currently working through a proposed merger with Piedmont Lithium, a point that's impacted the ASX lithium stock this year.
The combined entity, dubbed "MergeCo," aims to establish North America's largest hard rock lithium producer.
Time will tell if it goes through or not.
Foolish takeout
The lithium sector's fortunes in 2025 hinge on a few key factors: stabilising prices, strong EV demand, and tighter supply-side management, in my view.
Macquarie now has buy ratings on Sayona Mining, Piedmont Lithium and Atlantic Lithium as of this week.
