World lithium demand might exceed 13 million tonnes by 2050 underneath an accelerated vitality transition, greater than double base case projections, in accordance with Wood Mackenzie’s newest Power Transition Outlook for Lithium. With out important new funding, provide deficits might emerge as early as 2028. Even underneath the Wooden Mackenzie’s base case state of affairs, current provide initiatives are unlikely to satisfy demand past the mid-2030s, highlighting the necessity for sustained funding throughout the worth chain.
“The lithium market is heading right into a provide crunch a lot prior to many business gamers anticipate,” mentioned Allan Pedersen, Analysis Director at Wooden Mackenzie. “Below bold local weather situations, we see deficits rising from 2028. The business must act now ought to governments
Base case figures are based mostly on the World Lithium Funding Horizon Outlook Q3 2025
Demand development pushed by electrification
Wooden Mackenzie fashions 4 vitality transition pathways, with lithium demand in 2050 starting from 5.6 Mt LCE underneath a delayed transition to 13.2 Mt LCE in a internet zero state of affairs.
- Below the Delayed Transition state of affairs, the market stays adequately equipped till 2037 earlier than getting into deficit.
- Below the Nation Pledges state of affairs, deficits emerge round 2029, requiring an extra 6.7 Mt LCE of provide by 2050 to satisfy projected demand.
- Below the Web Zero state of affairs, deficits are anticipated to start in 2028 and persist by way of mid-century. Further provide of roughly 8.5 Mt LCE shall be required by 2050.
Electrical autos (EVs) stay the first driver of demand development, accounting for 72-80% of lithium consumption throughout situations. EV penetration reaches roughly 75% by 2040 underneath the Nation Pledges state of affairs and 95% underneath the Web Zero state of affairs.
The report additionally notes that rechargeable batteries throughout all functions account for 96-98% of lithium consumption by mid-century.
“EVs stay the first driver of lithium demand development, however vitality storage techniques (ESS) are the sleeper story,” mentioned Rebecca Grant, Senior Analysis Analyst at Wooden Mackenzie. “ESS demand grows at 6-7% yearly in our ahead situations as renewables dominate new energy capability and grids require flexibility at scale.”
Fast demand development would require substantial new provide
Below the Nation Pledges state of affairs, the availability hole reaches 6.7 Mt LCE by 2050. Below the Web Zero state of affairs, the hole widens to eight.5 Mt LCE. Recycling will contribute rising volumes of provide however is unlikely to deal with near-term shortages. Recycled provide grows at 13-16% yearly, with significant volumes rising from the 2040s as electrical automobile batteries attain end-of-life.
By 2050, recycling contributes between 2.3 Mt and a couple of.7 Mt LCE underneath bold situations, famous Wooden Mackenzie.
Assembly demand requires unprecedented funding
Based on Wooden Mackenzie, whole funding necessities vary from roughly $104 billion underneath a delayed transition state of affairs to $276 billion underneath a internet zero state of affairs.
Funding necessities underneath completely different situations:
- Delayed Transition: $104 billion
- Base Case: $114 billion
- Nation Pledges: $236 billion
- Web Zero: $276 billion
Funding is anticipated to peak between 2030 and 2034, pushed by the necessity for brand spanking new mining capability, refining infrastructure and regional provide chains.
“It is a $100-275 billion funding story relying on how the vitality transition unfolds,” Grant mentioned. “The winners shall be those that can deploy capital effectively whereas navigating commerce fragmentation and securing regional market entry.”
4 pathways however one conclusion
Throughout all situations, one conclusion is constant: lithium is irreplaceable for the vitality transition, and the business faces structural provide challenges that require quick motion. “Whether or not we’re on a 1.5°C pathway or one thing much less bold, lithium demand will outstrip present provide plans,” Pedersen concluded. “The query isn’t whether or not we want extra lithium. It’s whether or not the business can mobilize capital quick sufficient to satisfy demand whereas navigating an more and more fragmented international commerce atmosphere.”
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