The lithium market is undergoing a fundamental shift—from supply-side concerns to demand-side optimism. UBS highlights that an underestimated "new EV-like" market is emerging, with explosive growth in energy storage demand driving lithium prices out of a bear market. This surge will also serve as a critical "bridge" solution to address the U.S. power supply gap.

On November 11, according to market reports, UBS stated in its latest research that battery energy storage systems (BESS) are becoming the "second growth engine" for lithium demand, rivaling the importance of electric vehicles (EVs).

UBS projects that by 2030, BESS demand will account for 22% to 26% of total battery demand, transitioning from a "marginal variable" to a "core driver." This surge is fueled by structural gaps in global power supply—U.S. electricity demand is growing at 3% annually, while new power generation facilities take 7 to 10 years to build, making energy storage the only viable near-term solution.

The report also notes that more aggressive forecasts, such as CATL's projection, suggest 2030 energy storage demand could double UBS's estimates. This demand shock, combined with supply disruptions, could swiftly turn UBS's predicted marginal surplus of 55,000 tons in 2026 into a deficit. UBS believes lithium prices have bottomed and will enter a steady recovery phase.

Strong expectations for large-scale BESS demand have significantly improved market sentiment. Lithium carbonate futures recently surged 5%, with spot prices hitting their highest since August last year. Citi's November 9 report emphasized that the rally is primarily demand-driven, not due to supply constraints.

Energy Storage: An Underestimated "New EV" Market The report highlights BESS as a major and growing driver of lithium demand. UBS forecasts global BESS demand will rise from 396 GWh in 2026 to 873 GWh by 2030, reflecting a 24% compound annual growth rate (CAGR) from 2025. By 2030, energy storage will represent 22%-26% of total battery demand.

Translated into upstream lithium demand, UBS estimates BESS will require 360,000 tons of lithium carbonate equivalent (LCE) in 2026, soaring to 680,000 tons by 2030. Annually, BESS will add ~90,000 tons of LCE demand, compared to EVs' ~170,000 tons—clearly positioning storage as a near-half-sized counterpart to EV demand.

Citi's more bullish analysis predicts 31% annual battery demand growth by 2026, with BESS expanding at 45%, far outpacing EVs' 26%.

U.S. Power Gap: Storage as the Only "Bridge" UBS identifies three macro drivers behind BESS demand:

1. **Unexpectedly high power demand growth**: U.S. electricity demand is rising at ~3% annually, well above the 1.8% forecast, driven by energy-intensive sectors like AI and data centers. 2. **Slow new generation capacity**: Building power plants takes 4-6 years, with gas turbine projects delayed until 2031 and nuclear plants until 2035. 3. **Tech giants securing clean energy**: Companies like Meta and Microsoft are locking in power supplies to meet surging demand and sustainability goals.

With new generation capacity lagging, UBS asserts BESS will be critical for balancing grids, integrating renewables, and bridging supply gaps over the next 7-10 years.

More Optimistic Forecasts: CATL Predicts Double UBS Estimates Notably, UBS's projections are conservative compared to industry leaders. CATL forecasts 2030 BESS lithium demand at 1.4 million tons LCE—twice UBS's 680,000 tons—signaling even greater market potential.

While supply-side risks persist, UBS argues that BESS's ~100% annual demand growth will outweigh these uncertainties. Its models show a negligible 55,000-ton LCE surplus in 2026 (versus 1.8 million-ton demand), likely triggering restocking as inventories thin.

Prices Recover, but Stocks Have "Priced In" UBS is bullish on lithium prices, forecasting spodumene concentrate to rise over 20% by mid-2026, averaging $1,100/ton (2026), $1,150/ton (2027), and $1,350/ton (2028), with a long-term equilibrium at $1,200/ton.

The report concludes that structural BESS demand is reshaping lithium fundamentals, tilting the market toward tightness and ending the bear cycle. However, Australian lithium miners' current stock prices already reflect spodumene at $1,150-$1,300/ton, suggesting equities have "front-run" the recovery.

Mid-term futures analyst Zhang Weixin cautions that rapid price gains may correct if sentiment shifts.