Goldman Sachs analysts. including Nicholas Snowdon and Aditi Rai, are predicting three key battery metals, Nickel Cobalt, and Lithium, are going to drop in value over the next two years, because investors looking to get a piece of of the upside of the green energy transition got in too fast. Although they note the long-term prospects for the metals continue to be strong due to the shift from internal combustion engines to electric motors and green energy, they maintain this present enthusiasm has produced an oversupply for the time being.

In a note on Sunday, the Goldman analysts noted, “Investors are fully aware that battery metals will play a crucial role in the 21st century global economy. Yet despite this exponential demand profile, we see the battery metals bull market as over for now.”

They go on to note that there has been, “a surge in investor capital into supply investment tied to the long term EV demand story, essentially trading a spot driven commodity as a forward-looking equity. That fundamental mispricing has in turn generated an outsized supply response well ahead of the demand trend.”

They are predicting a “sharp correction” in Lithium. Averaging under $54,000/ton this year, off from a spot price over $60,000, they are predicting a drop to around $16,000 in 2023. They are also predicting Cobalt will drop from $80,000/ton now to $59,500 next year and while Nickel may rise as much as 20% in the short term, it too will be driven back down in 2023.

They also predict, however, that after 2024, the prices of these metals may soar again, after investors get out in response to the price collapse while technology advances and the green transition continues apace, increasing demand.

The bank notes, “This phase of oversupply will ultimately sow the seeds of the battery materials super cycle over the second half of this decade. [Then] the demand surge will more sustainably overcome current supply growth.”