Analyst Note
| Seth Goldstein, CFA |Lithium stocks rallied following the U.S. Senate's passing of the Inflation Reduction Act. The bill provides subsidies for electric vehicles and plug-in hybrids, as long as a minimum proportion of critical minerals, including lithium, comes from the U.S. or its free trade partners. We think this will benefit all lithium producers from increased demand, which should keep the market undersupplied for longer. However, this aligns with our current view that the lithium market will remain undersupplied throughout the rest of the decade, supporting prices well above the marginal cost of production.