Global lithium demand could exceed 13 million tonnes by 2050 under an accelerated energy transition, more than double base-case projections, with supply deficits emerging as early as 2028 unless the industry invests up to $276 billion in new capacity, Wood Mackenzie warns.
In its latest Energy Transition Outlook for Lithium, released on March 2, the consultancy outlines four scenarios, with demand in 2050 ranging from 5.6 million tonnes of lithium carbonate equivalent (LCE) under a delayed transition to 13.2 million tonnes under a net-zero pathway.
A delayed transition scenario assumes governments and industries move more slowly to cut emissions, with weaker climate policies and slower adoption of clean technologies, resulting in lower demand growth for materials such as lithium in the near to medium term.
Supply crunch
Even in the base case, WoodMac said existing supply projects are unlikely to meet demand beyond the mid-2030s, highlighting the need for sustained investment in mining, refining and regional supply chains.
“The lithium market is heading into a supply crunch much sooner than many industry players expect,” Allan Pedersen, research director at WoodMac, said in the report. “Under ambitious climate scenarios, we see deficits emerging from 2028. Projects approved today will determine market balance in the critical 2030s.”
In a delayed energy transition scenario, the market remains adequately supplied until 2037 before entering deficit.
In the country pledges scenario, deficits emerge around 2029, requiring an additional 6.7 million tonnes LCE of supply by 2050. This case reflects current national climate commitments, including targets governments have formally announced under the Paris Agreement, assuming those pledges are fully implemented but not strengthened.
In the net zero scenario, deficits begin in 2028 and persist through mid-century, with an estimated 8.5 million tonnes LCE of additional supply needed by 2050. The net-zero model outlines a pathway aligned with limiting global warming to around 1.5 C, requiring rapid and widespread decarbonization across energy, transport and industry, and driving the highest demand for lithium.
Lithium-hungry EVs
Electric vehicles (EVs) remain the dominant driver of demand, accounting for 72% to 80% of lithium consumption across scenarios, WoodMac said. EV penetration reaches about 75% by 2040 under the country pledges scenario and 95% under net zero. By mid-century, rechargeable batteries across all applications represent 96% to 98% of total lithium consumption.
“EVs remain the primary driver of lithium demand growth, but energy storage systems are the sleeper story,” Rebecca Grant, senior research analyst at WoodMac, said in the report. She added that energy storage demand is projected to grow 6% to 7% annually as renewables account for a growing share of new power capacity and grids require greater flexibility.
Recycling isn’t enough
Recycling will supply increasing volumes over time but is unlikely to ease near-term shortages. Recycled supply is expected to grow 13% to 16% annually, with significant volumes emerging in the 2040s as EV batteries reach end of life. By 2050, recycling could contribute between 2.3 million and 2.7 million tonnes LCE under more ambitious transition scenarios.
To meet projected demand, WoodMac estimates total investment requirements of about $104 billion under a delayed transition and $114 billion in its base case, rising to $236 billion under country pledges and $276 billion under net zero. Investment is expected to peak between 2030 and 2034 as producers expand mining capacity, build refining infrastructure and strengthen regional supply chains.
“This is a $100-275 billion investment story depending on how the energy transition unfolds,” Grant said. “The winners will be those who can deploy capital efficiently while navigating trade fragmentation and securing regional market access.”
Fast capital
Across all scenarios, WoodMac reached the same conclusion: lithium remains essential to the energy transition, and current supply plans fall short of future demand.
“Whether we’re on a 1.5 C pathway or something less ambitious, lithium demand will outstrip current supply plans,” Pedersen said. “The question isn’t whether we need more lithium. It’s whether the industry can mobilize capital fast enough to meet demand while navigating an increasingly fragmented global trade environment.”
