Lithium enters 2026 in a very different place than it was two years ago. Prices are lower, sentiment is more cautious, and capital is more selective.

Global lithium consumption reached roughly 1.8 million tonnes of lithium carbonate equivalent in 2025, driven mainly by electric vehicles, which now account for close to 90% of total lithium demand. This is up sharply from just over 60% five years ago, according to industry and International Energy Agency (IEA)-linked projections.

At the same time, grid-scale energy capacity is accelerating, with BloombergNEF forecasting battery storage installations growing at compound annual rates above 30%, as power systems adapt to renewables and AI-driven data loads.

Following the lithium price correction of 2023–24, multiple producers scaled back output, delayed expansions, or placed higher-cost assets into care and maintenance, narrowing the pipeline of new supply growth. Analysts tracking project approvals and capital spending warn that without renewed investment, the retrenchment could set the stage for renewed supply deficits later this decade.

“Lithium looks quiet on the surface because prices have corrected, but the demand engine never stalled,” said Ryan Iverson, Portfolio Manager at CEM Partners Fund. “EVs, energy storage, and now AI-linked infrastructure are all pulling from the same lithium pool, while fewer projects are being built to refill it.”

China remains the centre of gravity for lithium demand, driven by record electric vehicle production and the world’s largest battery manufacturing base. Industry data shows China accounts for the majority of global lithium refining and nearly 85% of battery cell production capacity, giving it outsized influence over pricing and supply chains. It is scaling back production to further control the supply market.

Europe is approaching lithium from the demand side. Aggressive emissions targets, battery manufacturing mandates, and energy-security priorities have pushed the EU to localize battery supply chains. EV adoption continues to rise, while grid-scale storage is expanding to support renewable power integration. Analysts tracking European battery plants show consumption growth accelerating faster than local supply additions, increasing reliance on imports unless new projects advance quickly.

The United States sits between those two models. Demand is scaling rapidly under the Inflation Reduction Act, with both EV manufacturing and stationary storage seeing strong policy-backed growth. Forecasts cited by industry and government sources point to U.S. lithium carbonate demand rising from just over 100,000 tonnes in the mid-2020s to more than 500,000 tonnes by 2030. Yet domestic production and refining capacity remain limited, leaving a widening gap that must be filled by new projects or trusted suppliers.

Across regions, including Canada, the common thread is timing. Supply growth is slower, more cautious, and increasingly shaped by capital discipline rather than ambition. For investors, that sets the stage for the next phase of the lithium market, one where jurisdiction, infrastructure, and delivery timelines matter more than headline resources alone.

Three companies that stood out during the Investor Breakout Exchange at CEM Events this year each offer a different way to gain exposure to the unfolding lithium reset.

E3 Lithium

E3 Lithium (TSX-V: ETL) represents the Canadian supply story, with a focus on lithium extracted from brines in Alberta. The company benefits from decades of oil and gas infrastructure, a skilled local workforce, and a regulatory environment that is familiar with large-scale fluid handling. Unlike early-stage exploration narratives, E3 has emphasized methodical progress toward development, positioning its assets as long-life resources rather than short-cycle trades.

At the centre of the company’s strategy is the Bashaw District in central Alberta, where E3 controls one of the country’s largest defined lithium brine resources. The district hosts 16.2 million tonnes of measured and indicated lithium carbonate equivalent, contained within a well-understood reservoir that has supported decades of fluid production. E3’s Clearwater Project sits within that system as Canada’s first lithium-in-brine reserve, with an initial development plan designed to support scalable, long-life production while keeping land use and water impacts low.

“E3 is about building durable supply in the right place. Alberta brings infrastructure, regulatory clarity, and skilled labour, and that combination matters as North America looks to secure long-term lithium supply without taking on unnecessary risk,” said Iverson.

For 2026, E3’s trajectory is about advancing permitting, engineering, and commercial partnerships. As governments look to diversify lithium supply away from concentrated jurisdictions, projects in stable regions with clear regulatory pathways gain relevance. E3’s positioning aligns with that shift, particularly as Canada looks to strengthen its role in North American battery supply chains.

LibertyStream Infrastructure Partners Inc.

LibertyStream (TSX-V: LIB) is built around speed and capital efficiency at a time when both matter more than ever in the lithium market. The company is advancing a direct lithium extraction (DLE) model that targets lithium-bearing produced water from existing oil and gas operations, primarily in major U.S. basins.

Instead of developing new mines, LibertyStream works with fluids that are already being pumped, transported, and managed as part of ongoing energy production, dramatically reducing the need for new infrastructure.

LibertyStream’s model focuses capital on processing and conversion rather than on mining and site build-out. It is about getting lithium to market faster by re-engineering how it is produced.

“LibertyStream stands out because it tackles lithium’s biggest constraint head-on: time,” Iverson said. “By working with existing infrastructure, the company is trying to compress development timelines in a market where speed is becoming as important as scale.”

Demonstrating consistent lithium recovery, product quality, and operating economics at increasing volumes will be the key milestones investors are watching.

Lithium Royalty Corp.

Lithium Royalty Corp. (TSX: LIRC) offers a different way to gain exposure to the lithium market, one that emphasizes diversification, capital discipline, and downside protection. Organized in Canada, the company has built a globally diversified portfolio of 37 royalties tied to mineral properties that support the electrification and decarbonization of the global economy.

Rather than deploying large amounts of capital to build mines or operate projects, Lithium Royalty participates as production volumes come online or as prices recover, with limited exposure to operating and construction risk. The portfolio includes royalties linked to lithium and other energy transition materials, providing broad exposure to future supply growth without reliance on any single asset or jurisdiction.

Ryan Iverson sees the model as particularly well suited to the current phase of the cycle. “Lithium Royalty offers diversification and leverage to a tightening supply picture without relying on a single project or operating outcome,” he said.

Looking into 2026, Lithium Royalty is positioned to benefit from two parallel trends. As lithium developers restart or advance projects delayed during the recent price correction, portions of the royalty portfolio can quietly move closer to cash flow. At the same time, if lithium pricing strengthens later in the decade as supply struggles to keep pace with demand, royalty structures tend to amplify upside while limiting downside.

The Investor Takeaway

Looking ahead, lithium’s next phase is unlikely to be defined by a sudden price spike or a single catalyst. Instead, 2026 shapes up as a year where project execution, policy follow-through, and capital allocation quietly determine who is positioned for the next turn of the cycle.

As demand keeps compounding and supply growth remains restrained, the market’s margin for error is shrinking, even if that pressure is not yet fully reflected in prices.

For investors, that shifts the lens from spotting short-term rebounds to understanding timelines.

What comes next will be decided by which strategies can actually deliver tonnes, in the right places, at the right time, as the energy transition powered by lithium continues to gather pace.

Next Week in the Investor Breakout Newsletter...

We focus on Clean Energy and Carbon Solutions, where the energy transition is moving past policy promises and into real projects that attract serious capital.

Warm Regards and Happy Investing,
Fabian Dawson

Weekly Insight

Each week, CEM Partner and Portfolio Manager Ryan Iverson spotlights the ideas and companies sparking investor interest from emerging growth stories to the Top Picks featured across CEM’s Capital Events. This series brings real insights from the innovators shaping tomorrow’s markets and reveals where investors are finding the next breakout opportunities.