Global lithium demand could exceed 13 million tonnes by 2050 under an accelerated energy transition, with supply deficits potentially emerging as early as 2028 unless the industry invests up to $276 billion in new capacity, Wood Mackenzie warns. In its most recent Energy Transition Outlook for Lithium, the consultancy presents four possible trajectories for market development. It suggests that, depending on how rapidly governments and industry advance the global energy transition, lithium demand could rise to between 5.6 million and 13.2 million tonnes of lithium carbonate equivalent (LCE) by 2050. At the same time, Wood Mackenzie notes that existing supply plans may fall short of meeting demand in several of these projected scenarios.
Allan Pedersen, Research Director at Wood Mackenzie, warned that the lithium market could face supply constraints earlier than many industry participants currently anticipate. According to his analysis, under more ambitious climate transition scenarios, supply deficits may begin to emerge as early as 2028. He emphasized that if governments continue advancing policies aimed at achieving net-zero emissions, the industry will need to respond quickly. Pedersen also noted that investment decisions and project approvals made today will play a decisive role in determining market balance during the crucial 2030s.
Under a delayed energy transition scenario, the lithium market is expected to remain sufficiently supplied until around 2037, after which supply deficits begin to emerge. In the country pledges scenario, however, the market is projected to enter deficit as early as 2029, requiring an additional 6.7 million tonnes of lithium carbonate equivalent (LCE) by 2050. This scenario reflects the climate commitments currently announced by national governments, including targets submitted under the Paris Agreement, assuming that these pledges are fully implemented but not further strengthened.
In the net-zero scenario, supply shortages are projected to begin in 2028 and continue through the middle of the century, with an estimated 8.5 million tonnes LCE of additional supply required by 2050. This pathway aligns with limiting global warming to approximately 1.5°C and assumes rapid and large-scale decarbonization across the energy, transportation and industrial sectors, resulting in the strongest demand growth for lithium.
Lithium-hungry EVs
Electric vehicles (EVs) continue to be the leading source of lithium demand, accounting for roughly 72%–80% of total consumption across different scenarios, according to Wood Mackenzie. Under the country pledges scenario, EV penetration is projected to reach approximately 75% by 2040, while in the net-zero scenario it could rise to around 95%. By the middle of the century, rechargeable batteries used across various applications are expected to account for between 96% and 98% of global lithium consumption.
Rebecca Grant, Senior Research Analyst at Wood Mackenzie, noted that EVs will continue to drive the majority of growth in lithium demand, while energy storage systems (ESS) are emerging as an increasingly important contributor. She explained that ESS demand is projected to grow at an annual rate of about 6%–7% in future scenarios, supported by the rapid expansion of renewable energy capacity and the growing need for large-scale grid flexibility.
Recycling isn’t enough
Although recycling is expected to play an increasingly important role in lithium supply, it is unlikely to significantly alleviate supply shortages in the near term. Recycled material is projected to grow at an annual rate of around 13%–16%, with substantial volumes only beginning to emerge in the 2040s as large numbers of EV batteries reach the end of their service life. Under more ambitious energy transition scenarios, recycled lithium could contribute approximately 2.3 million to 2.7 million tonnes of lithium carbonate equivalent (LCE) by 2050.
To meet the projected rise in demand, Wood Mackenzie estimates that total investment requirements could reach about $104 billion under a delayed transition scenario and $114 billion in the base case. The required investment would increase further to roughly $236 billion under the country pledges scenario and $276 billion under the net-zero pathway. Capital deployment is expected to peak between 2030 and 2034, when producers accelerate efforts to expand mining operations, develop refining capacity and reinforce regional supply chains.
Grant indicated that the scale of investment required could range from approximately $100 billion to $275 billion, depending on how the global energy transition progresses. She also noted that companies most likely to succeed will be those capable of allocating capital efficiently while managing increasing trade fragmentation and securing reliable access to regional markets.
Supply shortage
Across all modeled scenarios, Wood Mackenzie reaches a consistent conclusion: lithium will remain a critical material for the global energy transition, while currently planned supply is insufficient to satisfy future demand.
Pedersen noted that regardless of whether the world follows a 1.5°C pathway or a less ambitious decarbonization trajectory, demand for lithium is expected to exceed the supply outlined in current development plans. He further explained that the key challenge facing the industry is not the necessity for additional lithium resources, but whether companies can mobilize sufficient capital quickly enough to expand supply while operating within an increasingly fragmented global trade landscape.
Conclusion
Leading consulting institutions widely agree that, in response to climate change, global demand for lithium is set to continue expanding. At the same time, the supply-demand gap for lithium is also expected to widen as economic development and the energy transition accelerate. Against this backdrop, the current period represents a strategic window for companies to strengthen their presence in the lithium industry. For market participants, improving production efficiency and reducing operating costs will be critical to gaining a competitive advantage in the lithium market.
As a provider of direct lithium extraction (DLE) solutions, BICHEM has been deeply engaged in the lithium extraction sector for many years. It has pioneered an integrated process that combines adsorption, membrane separation, and solvent extraction technologies in a parallel-coupled configuration, significantly enhancing lithium recovery efficiency while reducing production costs and operational risks. Looking ahead, BICHEM seeks to establish both technical and commercial partnerships with more companies interested in developing the lithium industry, working together to promote sustainable development and build a greener future.
