Lithium Demand Could Cross 13 Mt by 2050; Supply Deficits May Begin in 2028: Wood Mackenzie

Global lithium demand could exceed 13 million tonnes by 2050 under an accelerated energy transition, more than double base case projections, according to Wood Mackenzie’s latest Energy Transition Outlook for Lithium. Without significant new investment, supply deficits could emerge as early as 2028. Even under the Wood Mackenzie’s base case scenario, existing supply projects are unlikely to meet demand beyond the mid-2030s, highlighting the need for sustained investment across the value chain. 

Allan Pedersen, Research Director at Wood Mackenzie, said, “The lithium market is heading into a supply crunch much sooner than many industry players expect. Under ambitious climate scenarios, we see deficits emerging from 2028. The industry needs to act now should governments progress policies towards Net Zero. Projects approved today will determine market balance in the critical 2030s.”

Electrification is expected to significantly accelerate lithium demand in the coming decades. According to modeling by Wood Mackenzie, four energy transition pathways outline varying supply-demand outcomes through 2050, with lithium demand projected to range from 5.6 million tonnes of lithium carbonate equivalent (Mt LCE) under a Delayed Transition scenario to 13.2 Mt LCE in a Net Zero scenario. Under the Delayed Transition pathway, the lithium market is projected to remain adequately supplied until 2037, after which deficits are expected to emerge. In contrast, the Country Pledges scenario anticipates supply shortfalls beginning around 2029, necessitating an additional 6.7 Mt LCE of supply by 2050 to meet projected demand. The most aggressive trajectory, the Net Zero scenario, forecasts deficits starting as early as 2028 and persisting through mid-century, with approximately 8.5 Mt LCE of additional supply required by 2050 to bridge the gap.

Electric Vehicles (EVs) remain the primary driver of demand growth, accounting for 72–80 percent of lithium consumption across scenarios. EV penetration reaches approximately 75 percent by 2040 under the Country Pledges scenario and 95 percent under the Net Zero scenario. 

The report also noted that rechargeable batteries across all applications account for 96–98 percent of lithium consumption by mid-century.

Rebecca Grant, Senior Research Analyst at Wood Mackenzie, said, “EVs remain the primary driver of lithium demand growth, but energy storage systems (ESS) are the sleeper story. ESS demand grows at 6-7 percent annually in our forward scenarios as renewables dominate new power capacity and grids require flexibility at scale.” 

Under the Country Pledges scenario, the supply gap reaches 6.7 Mt LCE by 2050. Under the Net Zero scenario, the gap widens to 8.5 Mt LCE. Recycling will contribute to increasing volumes of supply but is unlikely to address near-term shortages. Recycled supply grows at 13–16 percent annually, with meaningful volumes emerging from the 2040s as electric vehicle batteries reach end-of-life.  

By 2050, recycling contributes between 2.3 Mt and 2.7 Mt LCE under ambitious scenarios, noted Wood Mackenzie. 

According to Wood Mackenzie, total investment requirements range from approximately USD 104 billion under a delayed transition scenario to USD 276 billion under a net zero scenario.

Investment is expected to peak between 2030 and 2034, driven by the need for new mining capacity, refining infrastructure and regional supply chains.

Gred added, "This is a USD 100-275 billion investment story depending on how the energy transition unfolds. The winners will be those who can deploy capital efficiently while navigating trade fragmentation and securing regional market access.”

Across all scenarios, one conclusion is consistent: lithium is irreplaceable for the energy transition, and the industry faces structural supply challenges that require immediate action. “Whether we're on a 1.5 Degree C pathway or something less ambitious, lithium demand will outstrip current supply plans,” Pedersen concluded. “The question isn't whether we need more lithium. It's whether the industry can mobilise capital fast enough to meet demand while navigating an increasingly fragmented global trade environment.”