Reports break down complex lithium demand outlook
- 21 May 2025
New fronts are rapidly opening up in the global electric-vehicle battery supply wars amid surging energy sector demand for battery power, which hit the one terawatt-hour (TWh) mark in 2024, according to reports on new energy mobility and core battery ingredient, lithium.
“Demand for one average week alone in 2024 exceeded the total demand for an entire year just a decade earlier,” the International Energy Agency said of world energy-sector battery demand in its latest Global EV Outlook report.
The report said electric cars made up more than 20% of global vehicle sales last year – over 17 million units – with China’s plus-11 million cars double the level in 2022.
London-based Project Blue says in its new report on lithium, “the element shaping our future”, forecast growth in battery EV and plug-in hybrid EV sales to 35% of total world vehicle sales in 2030 and 60% by 2040 are powering an expected global rise in lithium use from 1.3 million tonnes lithium carbon-equivalent last year to more than 3.6Mt LCE by 2040. That could grow to 5.2Mt, depending on a range of factors including the growth in use of certain battery chemistries and indeed overall uptake of the metal in EVs and energy storage systems (ESS).
Regardless, it sees lithium carbonate and lithium hydroxide as “critical ingredients in the battery world”. Its Lithium 2040 report was produced with the International Lithium Association, which has more than 70 member organisations including most of the world’s top lithium producers.
Projected 2024-to-2040 demand growth comes on top of the steep climb from only circa-120,000t of lithium consumption in 2010. Project Blue says getting to the 2040 peak will make lithium “one of the fastest-growing commodities of this, or any, generation”.
“Pushing the frontier further, the pursuit of higher-performance batteries is ushering in a new era of lithium applications,” its report said. “Technologies like lithium-rich layered oxides and solid-state batteries are poised to become key breakthroughs in the battery innovation timeline through to 2040.
“These cutting-edge systems need even more lithium, adding new layers to global supply chains and promising to amplify lithium demand for years to come.
“Although carbonate will take preference in China in the short-to medium-term the arrival of solid-state batteries will increase demand for lithium hydroxide post 2030.
“The 2030s are poised to become the decade for greater solid state battery adoption assuming production costs become competitive. Such batteries will likely opt for state-of-the-art high-nickel cathode chemistries to maximise energy density and cell-level efficiency.”
The IEA said lithium prices dropped nearly 20% in 2024, reaching similar prices to those at the end of 2015 despite lithium demand in 2024 being about six times greater than in 2015. “Prices for lithium-ion battery packs fell 20% in 2024 – the largest drop since 2017 – as a result of low critical mineral prices and battery margins being squeezed through competition, predominantly in China,” the IEA report said.
The IEA says technology innovation, “particularly related to sodium-ion batteries or direct lithium extraction”, could be instrumental in reducing future risks of lithium undersupply and its potential impact “and avoiding price spikes similar to those seen in 2022”. It says vertical integration through upstream investments could also help battery suppliers lower production costs and buffer against mineral price volatility.
“Technologies like solid-state and lithium-sulphur batteries could also accelerate electrification in sectors that require or would benefit from higher energy densities, such as long-haul electric trucks or short-haul boats and planes,” the IEA report said.
“However, their deployment in these sectors will depend on meeting stringent safety requirements and on their total cost of ownership.”
Project Blue’s report said the use of solid rather than liquid electrolyte in solid-state batteries would enable the introduction of alternative anode chemistries to “achieve even higher energy densities for longer EV ranges”.
“SSBs also have the potential to achieve higher safety ratings than traditional cells due the elimination of the flammable liquid electrolyte,” its report said.
It expects commercialisation of SSBs in EV applications to start around 2030, “with initial offerings utilising silicon-engineered anodes”.
“Silicon experiences large volume fluctuations during lithiation and delithiation, which results in aggravated lithium loss and rapid capacity fade during cycling.
“To manage these unwanted side-effects pre-lithiation strategies will be implemented by embedding lithium in the anode active material to replenish lithium consumed by these side reactions during initial cycles. This will inevitably generate incremental lithium demand as silicon anode technologies scale with increasing demand for longer range EVs.”
Innovations that “unlock further energy density gains over current-generation batteries” and shift material demands by degrees are part of a dynamic substrate underpinning the energy mobility transition.
The massive concentration of global battery supply chain midstream and manufacturing capacity and, currently, end-use, in China is of concern to groups such as the IEA. It highlighted China’s 80% share of global battery cell production in 2024 and 30% growth in EV battery demand off its high base. As well as its major competitive advantages this gives China the huge benefit of innovating from an elevated and expansive platform to drive further technological gains on multiple fronts.
The IEA says China-dominated lithium iron phosphate (LFP) batteries that met nearly 75% of the country’s domestic battery demand last year also made up nearly half the global EV battery market.
“Lithium iron phosphate batteries continue to gain market share and with them so do Chinese manufacturers,” its report said. Almost 30% cheaper per kWh than lithium nickel cobalt manganese oxide (NMC) batteries widely used in the US and Europe, they were helping to drive EV sales. “NMC batteries still provide an energy density advantage, though the gap has narrowed in recent years.
“LFP batteries have now reached a performance level sufficient for most EV applications, making their lower cost a key advantage for automakers aiming to mass markets.
“Notably, nearly all the LFP batteries for electric cars sold in Europe or the US [in 2024] were produced in China, which today has a de facto monopoly on this type of battery. Market penetration of LFP batteries is moving even faster in other markets. In Southeast Asia, Brazil and India the share of electric car batteries using LFP reached more than 50% in 2024.
“The faster pace of battery cost reduction and innovation in China has been enabled by fierce competition that has driven down profit margins for most producers – though not all – at the same time as driving up manufacturing efficiency and yields, as well as access to a large skilled workforce, and battery supply chain integration.”
The concentration of skills and expertise in China contrasted with gaps elsewhere, the IEA has said, citing the collapse of Northvolt in Sweden and the US due to scale-up difficulties and high costs as a case “further aggravated by limited experience”.
“Korean manufacturers are rising to the challenge and are now investing in LFP, including through innovation efforts, and are scaling up LFP battery production, including in Europe and the US,” the IEA report said.
“LFP battery development is also advancing in Japan.
“Yet Chinese manufacturers are continuing to innovate LFP chemistry and performance simultaneously, further raising the bar for other producers.
“At the same time, the Chinese government’s proposed export restrictions on advanced LFP technologies could limit technology transfer.”
On other fronts, Chinese battery manufacturer CATL is starting production of its second generation of sodium-ion batteries in 2025 while car maker BYD is also investing in sodium-ion battery production for EVs and battery storage. China’s HiNa Battery Technology said in March it had launched a new sodium-ion battery.
The IEA report said the first battery plants in India and Indonesia opened last 2024, introducing more than 5 GWh/year and 10 GWh/year of manufacturing capacity, respectively. Indonesia, home to half the world’s mined nickel needed for NMC batteries, was also investing heavily in production of battery components such as cathode and anode active materials, with its first graphite anode plants starting up last year.
“India also has the potential to unlock a substantial battery market and is investing in domestic battery production, but realising its ambition to become a major battery manufacturer will require additional investments and clear policy signals supporting EV demand,” the report said.
“In Morocco, abundant phosphate reserves – a mineral essential for LFP batteries – along with an established car manufacturing industry and free trade agreements with the European Union and the United States, have spurred over US$15 billion in announced investments.
“These investments comprise lithium processing and battery and component manufacturing, including a large battery manufacturing plant of 100 GWh, the first in Africa.”
