Global demand for lithium could exceed 13 million tons by 2050 under an accelerated energy transition, which is projected to be more than double the base case. Wood Mackenzies latest energy transition prospects for lithium. Without significant new investments, supply shortages could emerge as early as 2028. Even under Wood Mackenzie’s baseline scenario, existing supply projects are unlikely to meet demand beyond the mid-2030s, underscoring the need for sustainable investment across the value chain.
“The lithium market is heading towards a supply shortage much faster than many industry players expect,” said Allan Pedersen, research director at Wood Mackenzie. “Under ambitious climate scenarios, we see shortages emerging from 2028. The sector must act now as governments
Basic figures are based on the Global Lithium Investment Horizon Outlook Q3 2025
Demand growth driven by electrification
Wood Mackenzie models four energy transition pathways, with lithium demand in 2050 ranging from 5.6 Mt LCE under a delayed transition to 13.2 Mt LCE in a net-zero scenario.
- In the postponed transition scenario, the market will remain sufficiently supplied until 2037 before a shortage arises.
- Under the Country Pledges scenario, shortages emerge around 2029, requiring an additional 6.7 million tonnes of LCE supply by 2050 to meet expected demand.
- Under the Net Zero scenario, shortages are expected to begin in 2028 and last until mid-century. By 2050, an additional supply of approximately 8.5 million tons of LCE will be required.
Electric vehicles (EVs) remain the main driver of demand growth, accounting for 72-80% of lithium consumption in all scenarios. EV penetration will reach approximately 75% under the Country Pledges scenario and 95% under the Net Zero scenario by 2040.
The report also notes that rechargeable batteries will account for 96-98% of lithium consumption across all applications by mid-century.
“EVs remain the main driver of lithium demand growth, but energy storage systems (ESS) are the slack story,” said Rebecca Grant, Senior Research Analyst at Wood Mackenzie. “ESS demand will grow by 6-7% annually in our future scenarios, as renewables dominate new energy capacity and networks require flexibility at scale.”
Rapid growth in demand will require substantial new supply
Under the Country Pledges scenario, the supply gap in 2050 is 6.7 million tonnes of LCE. In the Net Zero scenario, the gap widens to 8.5 million tons of LCE. Recycling will help increase supply, but is unlikely to solve short-term shortages. The supply of recycled material is growing by 13 to 16% annually, with significant volumes expected to emerge from 2040 onwards as electric vehicle batteries reach the end of their life.
By 2050, recycling will contribute between 2.3 and 2.7 million tonnes of LCE under ambitious scenarios, Wood Mackenzie said.
Meeting demand requires unprecedented investments
According to Wood Mackenzie, total investment needs range from approximately $104 billion in a delayed transition scenario to $276 billion in a net-zero scenario.
Investment requirements under different scenarios:
- Delayed transition: $104 billion
- Base case: $114 billion
- Country commitments: $236 billion
- Net zero: $276 billion
Investments are expected to peak between 2030 and 2034, driven by the need for new mining capacity, refining infrastructure and regional supply chains.
“This is a $100 to $275 billion investment story, depending on how the energy transition unfolds,” Grant said. “The winners will be those who can deploy capital efficiently while avoiding trade fragmentation and securing access to the regional market.”
Four trajectories, but one conclusion
Across all scenarios, one conclusion is consistent: lithium is irreplaceable for the energy transition, and the industry faces structural supply issues that require immediate action. “Whether we are moving towards a temperature of 1.5°C or something less ambitious, demand for lithium will exceed current supply plans,” Pedersen concludes. “The question is not whether we need more lithium. The question is whether the industry can mobilize capital quickly enough to meet demand while navigating an increasingly fragmented global trading environment.”
