According to analysts at Wood Mackenzie, global lithium demand could grow significantly more strongly in the coming decades than previously assumed in many base-case scenarios. In its current “Energy Transition Outlook for Lithium,” the consultancy outlines four possible development paths for the market. Depending on how quickly governments and industry drive the energy transition, demand could reach between 5.6 and 13.2 million tonnes of lithium carbonate equivalent (LCE) by 2050. At the same time, Wood Mackenzie warns that currently known supply plans would not be sufficient to meet future demand in several scenarios.
This assessment is particularly relevant because, according to the analysis, possible bottlenecks could appear earlier than some parts of the market expect. In the most ambitious scenario, which aims for a path toward net-zero emissions, supply deficits would occur as early as 2028. Even in the so-called Country Commitment Scenario, which assumes the full implementation of already announced national climate targets, Wood Mackenzie expects a deficit from around 2029. This brings lithium back into sharper focus as a key raw material for the energy transition.
Lithium demand depends heavily on the pace of the energy transition
Wood Mackenzie distinguishes between four scenarios in its study. At the lower end is a delayed energy transition. This model assumes that states and companies reduce their emissions more slowly, climate policy is less decisive, and clean technologies are introduced more gradually. In this case, demand for lithium would also grow, but much more moderately. For 2050, the consultancy cites 5.6 million tonnes of LCE in this scenario.
In contrast, there is a Net Zero scenario based on a development path intended to limit global warming to approximately 1.5 degrees Celsius. This would require rapid and broad decarbonization in the energy, transport, and industrial sectors. The demand for raw materials in this model is correspondingly high: by 2050, demand could rise to 13.2 million tonnes of LCE, more than twice as high as in the base-case estimates.
Even between these two poles, Wood Mackenzie already sees significant tensions in the market. In the base-case scenario, existing projects are likely not enough to meet demand beyond the mid-2030s. According to the study, this points to an ongoing need for investment in mining, refining, and regional supply chains. The decisive factor is not only the amount of additional production developed but also the timing at which new capacities become available.
Electric cars remain the most important driver for lithium
Wood Mackenzie continues to see the largest contribution to future lithium demand coming from electric vehicles. Depending on the scenario, EVs are expected to account for between 72% and 80% of total lithium consumption. In the Country Commitment Scenario, the market penetration of electric vehicles would rise to about 75% by 2040. In the Net Zero scenario, this figure is as high as 95%.
The importance of the battery market becomes even clearer when looking at total applications. By the middle of the century, rechargeable batteries are expected to account for 96% to 98% of total lithium consumption across all areas of use. This underscores the central role the raw material plays in the course of electrification and decarbonization.
In addition to electric vehicles, Wood Mackenzie also points to energy storage systems as an additional demand driver. Although this area often receives less attention, it could gain significant weight in the coming years. The background to this is the growing share of renewable energies in the power mix. The more new capacity from wind and solar energy is added, the more important flexible storage solutions become for stabilizing the grids. For this sector, the study expects annual demand growth of 6% to 7%.
Recycling helps in the long term but does not solve the short-term problem
Regarding supply, Wood Mackenzie points out that while recycling will gain importance, it can hardly compensate for short-term bottlenecks. The supply from recycled material is expected to grow by 13% to 16% per year over time. However, according to the analysts, larger quantities will only become available in the 2040s, when a larger stock of batteries from electric vehicles reaches the end of its service life.
By 2050, recycling could contribute between 2.3 and 2.7 million tonnes of LCE in more ambitious transition scenarios. This is a noticeable contribution, but according to the study, it is not enough to close the supply gap in the coming years. The market therefore remains heavily dependent on new mines, additional refining capacities, and more robust supply chains for the time being.
This is precisely where Wood Mackenzie sees the greatest need for action. In the delayed transition scenario, the company quantifies the total investment requirement at around US$104 billion. In the base-case scenario, this value rises to about US$114 billion. In the Country Commitment Scenario, around US$236 billion would already be necessary, while in the Net Zero scenario, investments of up to US$276 billion could be required. The study expects the highest investment momentum between 2030 and 2034.
Lithium supply gap could become visible from 2028
The bottom line is that Wood Mackenzie reaches a similar core conclusion in all scenarios: lithium remains an indispensable raw material for the energy transition, but current supply plans are not sufficient to fully meet the expected future demand. The difference between the scenarios lies primarily in how early and how pronounced the bottlenecks become visible.
In the delayed transition scenario, the study suggests the market will remain sufficiently supplied until 2037 before a deficit arises. In the scenario of existing national climate commitments, however, deficits appear as early as 2029. By 2050, an additional 6.7 million tonnes of LCE would be required there. In the Net Zero scenario, the undersupply begins as early as 2028 and, according to Wood Mackenzie, will continue until the middle of the century. In this case, an additional 8.5 million tonnes of LCE would have to be provided by 2050.
As a result, the discussion in the lithium market is increasingly shifting from the question of fundamental demand to the question of whether the industry can mobilize capital quickly enough and create new capacity. At the same time, the study makes it clear that alongside global demand growth, regional market structures and more fragmented trade relations are also gaining importance. For the market, this means that it is not just the quantity of lithium that counts, but also where, how, and especially how quickly new supply is established.
Lithium developer Controlled Thermal Resources with billion-dollar IPO
The extent to which the long-neglected topic of lithium is once again of interest to the markets can also be seen in the fact that lithium developer Controlled Thermal Resources (CTR) intends to go public in the USA through a merger worth $4.7 billion with the blank-check company Plum Acquisition Corp IV.
The transaction will enable CTR to further advance its flagship Hell’s Kitchen project and begin the first phase of construction, the developer of lithium and geothermal energy projects announced.
The first construction phase of the project is located in California’s Imperial Valley and is expected to include a lithium carbonate production capacity of up to 25,000 tonnes per year, a 50 MW clean energy plant, and the production of other key minerals. To date, the company has secured more than $285 million in private investment for the Hell’s Kitchen project.
