UBS upgraded the lithium sector Friday, saying demand from the energy transition will outstrip available supplies, supporting long-term prices. "We expect lithium demand to grow by 8x by 2030e and see a supply side struggling to keep up," the firm said Friday in a note to clients. "[W]e observe that new supply is higher cost and more technically demanding," the firm added. Ultimately, UBS said the higher cost of new supply will support prices over the long term. Across different types of lithium production, the firm now sees prices between 10% and 38% higher. Part of that is due to greenfield production – or new mines – requiring higher prices to incentivize production. The firm's analysts, led by Levi Spry, said they prefer companies that are currently producing lithium, rather than those that are in pre-production and not currently exposed to higher prices. Notable lithium names Lithium has been on a tear over the past year, hitting record levels amid forecasts for robust electric vehicle demand. Bringing a new mine online can take years, and it can also be challenging from a permitting perspective. "We maintain our overweight position in Li names, building more conviction in the sector through our upgrade of long-term prices. We see the supply curve building shape and steepening which will benefit the low cost incumbents," Spry said. Australia-based Allkem is on UBS' buy list. The company has brine, spodumene and hydroxide lithium operations. The firm noted that Allkem's business is geographically diverse, with operations in Australia, Argentina, Canada and elsewhere. Lithium represents 100% of the company's valuation, according to UBS. "AKE is characterized by a deep resource inventory and experience set in bring and hard rock lithium projects," the firm said. Fellow Australian name Mineral Resources is also on the company's buy list, as is China-based Ganfeng Lithium . A major player in the U.S. The U.S. has lithium-rich regions, but there's only one substantial mine in operation in the U.S. at present, operated by Albemarle . The company also has a chemicals division alongside its lithium operations. The stock hit a record high last week on the heels of strong earnings results in the latest quarter and upside from the Inflation Reduction Act . Still, UBS holds a neutral rating on the company, in part because of volatile earnings based on how Albemarle structures its contracts. The firm downgraded the company to a neutral rating in early June, saying that earnings were "over-charged." Building out a domestic supply chain of critical raw materials is a priority of the Biden Administration. President Joe Biden has called it a matter of national security, given that much of the battery refining business is currently concentrated in foreign countries, especially China. Albemarle is building out additional lithium capacity in North Carolina. Piedmont Lithium and Lithium Americas are also developing new mines, although neither is producing yet. UBS does not cover either stock. - CNBC's Michael Bloom contributed reporting.