Global lithium supply deficits expected as early as 2028
Global lithium demand could exceed 13mt by 2050 under an accelerated energy transition, according to Wood Mackenzie’s latest Energy Transition Outlook for Lithium.The report found that without significant new investment, supply deficits could emerge as early as 2028 as existing supply projects are unlikely to meet demand beyond the mid-2030s.Highlighting the need for sustained investment across the value chain, Wood Mackenzie predicts the global lithium industry requires up to $393b in new investment to prevent the looming supply deficit.In the report, Wood Mackenzie models four energy transition pathways, with lithium demand in 2050 ranging from 5.6mt LCE under a delayed transition to 13.2mt LCE in a net zero scenario.Under the delayed transition scenario, the market will remain adequately supplied until 2037 before entering deficit.Under the country pledges scenario, deficits emerge around 2029, requiring an additional 6.7mt LCE of supply by 2050 to meet projected demand, and under the net zero scenario, deficits are expected to begin in 2028 and persist through mid-century.Wood Mackenzie research director Allan Pedersen says the lithium market is heading into a supply crunch sooner than many industry players may suspect.“Under ambitious climate scenarios, we see deficits emerging from 2028,” he said.“The industry needs to act now should governments progress policies towards Net Zero. Projects approved today will determine market balance in the critical 2030s.”Electric vehicles (EVs) remain the primary driver of demand growth, accounting for 72–80% of lithium consumption across scenarios, according to Wood Mackenzie.The report also noted that rechargeable batteries across all applications account for 96–98% of lithium consumption by mid-century.Wood Mackenzie senior research analyst Rebecca Grant says energy storage systems (ESS) are the sleeper story.“ESS demand grows at 6-7% annually in our forward scenarios as renewables dominate new power capacity and grids require flexibility at scale,” she said.According to Wood Mackenzie, total investment requirements range from about $148b under a delayed transition scenario to $393b 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.“The winners will be those who can deploy capital efficiently while navigating trade fragmentation and securing regional market access,” Ms Grant said.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°C pathway or something less ambitious, lithium demand will outstrip current supply plans,” Mr Pedersen said.“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.”
