Lithium Demand Surges as EV Growth Pressures Global Supply
Electrification remains a key strategy in reducing energy emissions, according to the International Energy Agency (IEA).
It allows renewable energy sources to substitute where liquid and gaseous fuels were predominant.
With sales of electric vehicles (EVs) expanding and the global phase-out of petrol and diesel engines, the need for lithium-ion batteries is escalating.
This demand puts a strain on lithium supplies worldwide, raising questions about the capacity to meet extraction, refining and recycling needs.
The rise of lithium demand for EVs
Lithium is a critical material for lithium-ion batteries powering EVs. By 2024, the global requirement for EV batteries has crossed 950 GWh.
Over 90% of lithium consumed is now associated with battery production, based on IEA information. Each average EV battery uses about 8 kg of lithium.
“In a world of high geopolitical tensions, critical minerals have emerged as a frontline issue in safeguarding global energy and economic security,” says Dr Fatih Birol, Executive Director of the IEA.
Predictions from the World Economic Forum (WEF) suggest that by 2030, yearly lithium demand might reach 3 million tonnes (understand as lithium carbonate equivalent or LCE).
This is over three times the 2022 level of around 650,000 tonnes.
This surge is linked to the rapid growth in EV sales, with countries steadily phasing out traditional combustion vehicles as consumers turn to greener options.
Regional demand analysis
The future demand for lithium will be chiefly led by main automotive markets:
- China is likely to need around 1.18 m tonnes of LCE each year by 2030
- Europe is projected to require about 718,490 tonnes
- The United States will potentially need around 627,772 tonnes, according to IEA evaluations.
Supply constraints and potential imbalances
Investments in mining and refining have been substantial, yet the lithium supply chain struggles to increase swiftly enough. IEA data indicates that establishing a new mine typically takes over 16 years, with extraction concentrated in limited areas.
Australia spearheads current production levels while most reserves exist in the 'Lithium Triangle' comprising Chile, Argentina and Bolivia, regions with high water stress and ecological worries.
More than half of lithium production is already in areas suffering from water scarcity.
As this decade approaches its end, a gap between supply and demand looms probable. Forecasts from IEA and others caution that shortages could begin by 2025.
“Even in a well-supplied market, critical mineral supply chains can be highly vulnerable to supply shocks, be they from extreme weather, a technical failure or trade disruptions,” adds Fatih.
“The impact of a supply shock can be far-reaching, bringing higher prices for consumers and reducing industrial competitiveness.”
Pathways forward: Innovation and recycling
While new solutions are emerging, they are doing so gradually:
- Direct lithium extraction (DLE) could boost efficiency and lessen environmental damage, although its large-scale viability remains uncertain.
- Battery recycling might expand post-2030 as old EV batteries reach their end, potentially lowering primary lithium requirements.
- New chemistries, like sodium-ion batteries, eliminate the need for lithium, but they currently lack the energy density needed for most modern EV applications.
The WEF notes that approximately two billion EVs must populate roads by 2050 to achieve global net zero ambitions.
Yet, with worldwide reserves estimated at 22 million tonnes by the US Geological Survey, there is theoretically ample lithium to produce such a volume of vehicles.
In practice, economic, political and ecological challenges restrict access, processing and efficient usage of reserves. The industry confronts an urgent task: how to triple lithium production within a decade without inducing unsustainable extraction or geopolitical bottlenecks.
