Is this why ASX lithium shares are being crushed today?

Scared, wide-eyed man in pink t-shirt with hands covering mouth

Scared, wide-eyed man in pink t-shirt with hands covering mouth

It has been another difficult day for ASX lithium shares on Wednesday.

In afternoon trade, a number of lithium shares are underperforming the market and sinking deep into the red.

Which lithium shares are sinking?

Here’s a summary of some of the notable moves in the industry:

  • The Argosy Minerals Limited (ASX: AGY) share price is down 7%
  • The Core Lithium Ltd (ASX: CXO) share price has sunk 9.5%
  • The Lake Resources N.L. (ASX: LKE) share price has dropped 12%
  • The Liontown Resources Limited (ASX: LTR) share price is down 5%
  • The Sayona Mining Ltd (ASX: SYA) share price has fallen 7%

What’s happening?

Concerns over increasing supply and the potential impact this could have on lithium prices in the coming years have been weighing on lithium shares in recent weeks.

However, today’s decline appears to relate to the demand side of the equation.

This follows reports in Europe that Germany is planning to defy the European Union by backtracking on future plans to outlaw internal combustion engine (ICE) cars.

According to the Financial Times, Germany’s finance minister, Christian Lindner, has rejected plans for the ban on the sale of new petrol and diesel cars by 2035. This raises the prospect that the region’s green agenda will be watered down.

Germany is understood to be against the plan as there are concerns that it could lead to the loss of hundreds of thousands of jobs in the sector.

If Germany does go against the ban and ICE cars continue to be manufactured, this could have a major impact on the number of electric vehicles on European roads in 2035.

This could ultimately mean that lithium demand falls well short of forecasts, meaning we won’t need as much supply as previously thought. This may not bode well for prices of the white metal in the future.

The post Is this why ASX lithium shares are being crushed today? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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