A stuttering recovery in lithium prices is providing a fresh reminder of why the dramatic rally of recent years was followed by an even more breathtaking collapse: a fast-expanding industry that is more prepared than ever to keep pumping out supplies.

Prices have bottomed out but have struggled to meaningfully rebound, partly because miners, refiners and carmakers are still working through a mound of surplus stock clogging up the supply chain. And while some projects and mines were hurt by the pricing plunge, several of the biggest producers insist they¡¯ll keep expanding into the glut, further clouding the outlook for an eventual recovery in prices.

A vital component in rechargeable batteries, lithium has been thrust into the global spotlight as one of the world¡¯s most important commodities. The boom and bust of the past three years has exposed a once-niche and tiny market that is evolving and adjusting in real time to the unprecedented rollout of electric vehicles across the globe.

For much of the past year, that has meant reconciling a massive new wave of supply that caught many by surprise with EV demand evidence suggests is coming in weaker than expected.

Now, a key question facing the industry is whether it¡¯s doomed to repeat the cycle over again. Sharp spikes and plunges make planning difficult for both miners and their customers, but a prolonged bear market on the other hand would put pressure on smaller producers and increase concentration among a handful of powerful suppliers.

While many analysts and miners still expect prices to rebound substantially over the next few years as demand gathers pace, a faster flow of supply from a more diverse global mining base could mean the next boom-and-bust cycle will be shorter and less extreme ¡ª perhaps pointing to a maturing market.

¡°When the thing turns, will there be a ridiculous spike like there was last time? I hope not,¡± said Joe Lowry, founder of advisory firm Global Lithium. ¡°You¡¯re just going to bring in more garbage into the system and more volatility, which makes it harder for everybody.¡±

For many lithium bulls, the sudden swing to a global surplus has meant coming to terms with the idea that Elon Musk may have been right: There¡¯s a ¡°ridiculous¡± amount of lithium around the world, and the true supply constraint lies in refining it into battery-grade chemicals.

There is also a growing awareness among producers that pricing blowouts increase the likelihood that carmakers seek to avoid lithium altogether in their future batteries.

As EV demand and investment exploded early this decade, the lithium industry initially struggled to keep up. Forecasts of huge shortages drove panic buying among carmakers, which rushed to ink...