AMH Thought Leadership | July 2025
Tariffs make headlines. Lithium makes or breaks your next forklift delivery.
As battery-powered automation surges, lithium is no longer a niche concern for EV makers. It’s a foundational input in forklifts, UPS backups, AGVs, and smart warehouse infrastructure. And right now, more than 60% of the global refining that powers those systems is concentrated in China.
This isn’t theoretical. U.S. warehouse operators are already feeling the squeeze through longer lead times, higher equipment costs, and increased project risk. This brief breaks down what’s happening and how mid-size DCs can mitigate the impact.
China’s Lithium Refining Advantage
While countries like Australia and Chile mine large volumes of lithium, China refines the majority into battery-grade material.
- Over 60% of global lithium chemical refining occurs in China
- China accounts for 80% of lithium hydroxide production, essential for high-performance batteries
- Chinese firms dominate downstream processing: cathodes, anodes, and full battery components
In recent years, China has restricted exports of critical minerals like graphite and gallium. In 2025, it even proposed limits on lithium processing technologies. This “chokepoint strategy” introduces uncertainty for any business relying on battery components from overseas.
Western Response: Investments with Long Timelines
United States: Rebuilding from Scratch
The 2022 Inflation Reduction Act (IRA) links EV tax credits to batteries sourced from the U.S. or free-trade allies. This sparked a wave of domestic projects:
- Tesla is building a lithium hydroxide refinery in Texas
- Piedmont Lithium has broken ground on a new Tennessee plant
- Albemarle secured $90 million from the Department of Defense to reopen a North Carolina mine
These projects are critical—but most won’t reach scale before the late 2020s.
European Union: Strategic Mineral Limits
The EU’s Critical Raw Materials Act limits reliance on any one country to 65% of supply. Major mining and refining projects are underway in the Czech Republic, Spain, and Portugal.
Western governments are moving—but global demand is moving faster.
Impact on Warehouse Automation and Equipment
Battery Prices Rose, and May Rise Again
In 2022, lithium prices spiked. The effect on warehouses was immediate:
- Forklift battery packs jumped ~40% in price year over year
- Mid-sized operators saw quotes revised upward mid-project
- Battery costs became a gating factor for AGV rollouts and UPS installations
Even with price softening in 2023, supply risks remain. Volatility is likely through 2030.
Long Lead Times Became the Norm
What used to be a 12-week lead time for electric forklifts stretched to 8–12+ months. OEMs like Crown and Hyster-Yale paused new orders. Some mid-sized buyers turned to rentals, used gear, or retrofits to bridge gaps.
Lithium bottlenecks contributed to these disruptions, along with component shortages and freight backlogs. Even today, a single battery order can delay an entire project.
Near-Term Market Outlook
Price Forecasts Diverge
- Bearish view: A glut of batteries could keep prices under $20/kg through 2028
- Bullish view: Demand will outstrip supply again by 2025 or 2026, tightening the market
No one agrees on where prices will land. But the one constant is risk. Lithium is a volatile commodity with geopolitical exposure. Warehouses can’t afford to ignore that.
Demand Growth Is Inevitable
Global lithium demand is on track to:
- Triple between 2021 and 2025 (to ~1.5 million tonnes LCE)
- Double again by 2030 (to 3+ million tonnes)
Bringing a new lithium mine online takes 6 to 16 years. Even with investment, the risk of shortage remains. Any permitting delay or export restriction could tilt the balance.
Alternative Chemistries: Progress, Not Panacea
LFP Is Here to Stay
Lithium Iron Phosphate (LFP) batteries are gaining ground in forklifts and AGVs due to:
- Lower cost per cycle
- No reliance on cobalt or nickel
- Higher thermal stability
Energy density is lower than NMC, but that’s often acceptable in warehouse use. LFP will likely remain the dominant chemistry for industrial automation through the decade.
Sodium-Ion: Watch, Don’t Bet Yet
CATL (China) introduced a sodium-ion EV battery in 2025. It performs well in cold conditions and is lithium-free. However:
- Current costs are 2x that of LFP
- U.S. startups have struggled to stay solvent
- Mass adoption is unlikely before 2028
Solid-state batteries, while promising, are even further out—likely post-2030 for warehouse use.
Action Plan: What Smart Operators Are Doing Now
1. Monitor Key Indicators
Track lithium like you track fuel or steel. Specifically:
- Spot prices for lithium carbonate and hydroxide
- Export rules from China and allied nations
- Subsidy changes under the IRA or DoD battery programs
A sudden shift in any of these areas could affect project budgets.
2. Diversify Supply Sources
Avoid sole sourcing battery packs or forklifts. Instead:
- Work with multiple battery integrators or OEMs
- Join buying groups to increase leverage
- Consider long-term agreements that lock in pricing or availability
Some operators are keeping spare battery inventory on hand to hedge against disruptions.
3. Choose Flexible Equipment
When purchasing new gear, ask vendors:
- Can this forklift accept multiple battery chemistries?
- Can we retrofit the battery pack if needed?
- Does your system use standard form factors?
Flexibility is future-proofing. Lead-acid may not be ideal, but in a pinch, it keeps freight moving.
4. Leverage Incentives
The IRA, DoD, and many state-level programs offer:
- Tax credits for electrified equipment
- Co-funding for battery or UPS retrofits
- Pilot trials of next-gen storage
Keep your procurement teams up to date on eligibility. AMH can help assess where incentives apply.
5. Plan for Lifecycle and End-of-Life
Lithium volatility adds risk to replacement timing. Smart operators:
- Extend equipment life during price spikes
- Accelerate upgrades when costs dip or incentives rise
- Evaluate recycling programs that offer material credits toward new purchases
Recycled lithium and cobalt could meet up to 20% of demand by 2035. Forward-thinking warehouses are treating battery recycling as both ESG and supply strategy.
Final Word
Lithium may not be visible in your aisle layouts or pick rates. But it’s embedded in every equipment quote, lead time, and procurement cycle. And right now, the lithium supply chain is under pressure.
If your operation relies on battery power, now is the time to adapt. The companies that thrive in the next five years won’t be the ones who spend the most. They’ll be the ones who source strategically, diversify early, and build resilience before the next price spike hits.
Smart Storage. Smarter Supply Chains.
AMH helps mid-size operators plan around constraints—so you can keep projects on track, even when markets aren’t.
