Top 2 ASX Battery Stocks To Watch In FY26
The global shift to electrification isn’t slowing down, but lithium stocks on the ASX have spent much of the past two years caught in a painful downcycle. Prices of spodumene—the lithium-bearing mineral that underpins most battery supply chains—fell sharply from 2022 highs, leaving even the strongest producers scrambling to adjust.
Yet FY26 could mark a turning point. Rather than headlines being dominated by spot price swings, the focus is shifting back to operational execution, cost discipline, and project delivery. Among the ASX’s lithium names, Pilbara Minerals (ASX: PLS) and Liontown Resources (ASX: LTR) stand out as the top two battery stocks to watch. Both companies are entering FY26 with clearer pathways: Pilbara with record production and falling costs, Liontown with fresh funding and the start of underground ramp-up at its flagship project.
Let’s unpack why these two names matter most in FY26.
Pilbara Minerals: More Tonnes, Lower Costs, Bigger Resource
Pilbara Minerals is already the largest pure-play lithium producer on the ASX, and it continues to prove why it deserves its front-row position. Despite lower prices, the company exited FY25 with record output and strong cost control, a feat that sets it apart in a challenging market.
FY25 operational scorecard:
- Spodumene production: 754.6 kt, up 4% year-on-year, beating guidance of 700–740 kt.
- Sales: 760.1 kt, up 7% year-on-year.
- Unit operating cost (FOB): $627/t, down from $654/t in FY24.
- Total revenue: $768.85 million, even after a 43% drop in realised lithium prices.
FY26 guidance:
- Production of 820–870 kt, a meaningful step up.
- Unit operating cost cut further to $560–600/t (FOB).
- Capex easing sharply to $300–330 million, down from $569 million in FY25, as expansion projects wind down.
Resource growth:
In 2025, Pilbara delivered a 23% increase in contained lithium at its Pilgangoora project, reinforcing its long-term scale and optionality for further expansion or downstream integration.
Why it’s a FY26 watch:
The combination of higher volumes, lower costs, and falling capex gives Pilbara the operating leverage to shine if spodumene prices find stability. With a cash balance close to $1 billion, Pilbara has the flexibility to keep investing through the cycle and potentially resume stronger shareholder returns once markets recover.
Liontown Resources: Funded Ramp and Underground Transition at Kathleen Valley
Liontown has been a market talking point for years, but FY25 was the year its flagship Kathleen Valley project truly turned the corner. After delays, financing challenges, and broader market skepticism, the company secured capital, gained government support, and successfully began underground mining.
Project ramp-up:
- Underground production commenced in April 2025.
- Kathleen Valley was officially opened on 10 July 2025, marking a milestone for the lithium industry as Australia’s first large-scale underground lithium mine.
- Full underground implementation is targeted by September 2026, with phased ramp-up underway.
Funding strength:
- Secured $226 million via an institutional placement at $0.73 per share.
- Included $50 million from the National Reconstruction Fund Corporation (NRFC), highlighting sovereign recognition of lithium’s strategic importance.
- Supported further by a Share Purchase Plan (SPP).
Strategic positioning:
- Kathleen Valley is designed for 500 ktpa of spodumene concentrate at steady state.
- Expansion options remain open, and government involvement signals confidence in the project’s role in national critical mineral strategy.
Why it’s a FY26 watch:
Liontown now has the funding, government backing, and project momentum to deliver. The key test for FY26 will be hitting throughput, recovery, and ore quality milestones while managing capital discipline. If executed well, Liontown could become one of the most significant new lithium suppliers globally.
What Investors Should Track
Pilbara Minerals
- Quarterly production trending toward the 820–870 kt guidance.
- Confirmation that unit costs fall toward $560–600/t.
- Capex stability at ~$300–330 million, freeing up cash flow.
- Updates on dividend policies as spodumene prices stabilise.
Liontown Resources
- Ramp-up KPIs: concentrator throughput, recovery rates, and ore scheduling.
- Progress toward the September 2026 underground milestone.
- Balance sheet strength and cash runway, especially with softer lithium prices.
- Offtake cadence and customer diversification as output builds.
Key Risks
Pilbara Minerals: Persistent spodumene price weakness could weigh on margins despite cost cuts. Higher run rates must not compromise grade or recovery.
Liontown Resources: Execution risk in delivering Australia’s first underground lithium mine is high. Capex overruns or slower ramp-up could test investor patience and cash buffers.
Bottom Line
FY26 won’t magically lift lithium prices, but it will separate the operators from the rest of the pack.
Pilbara Minerals brings scale, falling unit costs, and a resource base that continues to grow—giving it the leverage to benefit first when prices turn.
Liontown Resources has overcome funding hurdles and now has a credible plan to ramp Kathleen Valley, supported by government recognition of its strategic importance.
In a market where discipline matters more than hype, these two stocks stand out as the top ASX battery plays to watch in FY26. For investors tracking the sector, their quarterly updates could offer the clearest signals of when lithium sentiment is ready to shift gears.
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