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Morgan Stanley Flags EV Demand Destruction as Lithium Soars

  • China battery makers will need to raise prices almost 25%
  • Bank overweight Tesla as best-placed to weather challenges
Bags of lithium carbonate.

Bags of lithium carbonate.

Photographer: Carlos Becerra/Bloomberg

Electric vehicle battery makers will need to raise prices by almost 25% due to soaring lithium carbonate prices, leading to crimped margins and possibly demand destruction, according to Morgan Stanley.

Chinese prices for lithium carbonate, the key ingredient in many batteries, have jumped fivefold over the past year, analysts including Jack Lu said in a note. The pass-through of costs could push EV manufacturers to raise prices by as much as 15% and may hit demand, they said in the note dated March 24.