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A second Donald Trump presidency was always going to make waves.
And looking at the new President’s actions within his first week – particularly concerning policies around renewable energy and building a ‘greener’ economy’ – one could be forgiven for thinking of the paradox of ‘an unstoppable force’ meeting ‘an immovable object.’
That is to say, Trump appears to present an immovable position of disdain towards environmentally friendly policies and clean energy transport – and a desire to emphasize fossil fuels instead.
However, he is faced with the unstoppable force of a global energy transition, underscored in particular by the growing popularity of electric vehicles (EVs).
And market-watchers might also ask, what could this mean for ASX-listed companies focused on critical minerals?
All the President’s roll-backs
In his first week – starting January 20 – Trump signed a swathe of executive orders, including one promising to get rid of what he described as an ‘electric vehicle mandate’ imposed by the Biden administration.
This referred to an executive order signed by Joe Biden in 2021 which was pushing for half of all vehicles sold in the U.S. by 2030 to be EVs. While the latter was more about encouraging buyers rather than restricting their access to other cars, Trump has sought to frame the issue as a matter of promoting ‘true consumer choice.’
His own order, ‘Unleashing American Energy,’ also ends Federal funding for vehicle charging stations – subject to completion of a review process – and works to end a federal exemption relating to California which allows the state to phase out the sale of vehicles fuelled by petrol (gas) by 2035.
The first of these has already received pushback from Democrats pointing out Biden’s charger funding was part of a wider bipartisan infrastructure law, together with climate law the Inflation Reduction Act – noting any attempts to remove funds already allocated would be illegal.
To further underscore his antagonism to environmentalism, Trump has also considered a U.S. withdrawal from the Paris Agreement, with a definite order to new UN ambassador Elise Stefanik to take the country out of any commitment made in the framework of the United Nations Framework Convention on Climate Change.
Where does this leave lithium?
Key to the electric vehicle story is the critical mineral of lithium, which has been locked in a volatile cycle, reaching a high point of 5750,000 Chinese yuan per tonne (CNY/t) in late 2022, before a dramatic fall of 86% over the last two years, as the market responded to the problem of oversupply, mainly from China.
The situation was still dicey coming into the new year; lithium prices had fallen 25% year-on-year throughout 2024.
China has also become the protagonist of an optimistic narrative for the metal as Beijing policymakers push for clean cars to make 20% of vehicles on Chinese roads by 2025.
Consumers there have been offered subsidies to buy EVs, and this was doubled in July 2024, with Chinese buyers flocking to purchase these vehicles: The latter trend was indicated by 31% growth in EV sales, year-on-year, for the first nine months of last year.
Additionally, recent data has shown the output of new energy vehicles within the country soared by 30.5% in December.
So will this demand and production mop up the lithium glut?
Waiting and watching… (the market)
On one hand, the outlook for this critical metal appears to be improving – with experts tipping the global supply of lithium carbonate (LCE) to fall from 150,000 tonnes in 2024 to 80,000 in 2025.
Again, this is largely based on Chinese demand right now.
Closer to home, the commodity’s continuing low price has affected local producers and explorers, exemplified by IGO Ltd (ASX:IGO)‘s decision (taken together with joint venture partner Tianqi Lithium) to close operations at its lithium refinery in Kwinana.
While design issues at the plant were part of the story, IGO acknowledged a weak lithium price had also prompted anticipation of a net loss in the first half of the year.
This followed pullbacks from other players in the lithium space, such as NYSE-listed Albemarle: Which in August 2024 announced that expansion efforts at its Kemerton lithium hydroxide conversion site – also in Western Australia – would be rolled back, with the workforce to drop by 40%.
On the other hand, ASX-listed companies such as Chariot Corporation Ltd (ASX:CC9) – which is approaching lithium at the exploration stage, with a large tenement portfolio in Wyoming, Nevada, and Oregon – are holding tight to their assets and waiting out the price headwinds while the EV market and lithium demand rebuilds.
US shift won’t stop EV’s strong narrative
Saxo Head of Commodity Strategy Ole S. Hansen believes that although Trump’s new policies and approaches may stifle the United States’ drive towards electric vehicle ownership, the overall trend remains positive.
“Demand for critical metals towards the energy transformation, and specifically the EV industry, may see a slowdown in demand from the US,” he said.
“But ultimately, I do not believe it will have a material impact on the demand outlook as the energy transition will continue — also in the U.S. — as long the industry can compete with traditional producers.
“The 50% target (of Biden’s) I believe was never realistic and it’s not my belief that miners have based their demand outlook on that assumption.”
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