According to a report from Fitch Solutions research unit BMI, the global supply of lithium, a crucial component in the production of consumer electronics and electric vehicle (EV) batteries, is expected to fall short of demand as early as 2025. This potential shortage is primarily attributed to China’s increasing demand for lithium, which currently exceeds the country’s available supplies.
BMI’s latest report stated, “We expect an average of 20.4% year-on-year annual growth for China’s lithium demand for EVs alone over 2023-2032.” However, China’s lithium supply is projected to grow by only 6% during the same period. Despite being the world’s third-largest producer of lithium, China’s demand is outpacing its domestic supply.
Global lithium production reached 540,000 metric tons in 2021, but the World Economic Forum estimates that global demand will exceed 3 million metric tons. This significant disparity between supply and demand highlights the potential for a critical lithium shortage in the near future.
The increasing sales of electric vehicles further exacerbate the demand for lithium. S&P Global Commodity Insights forecasts that global electric car sales will reach 13.8 million units in 2023 and soar to more than 30 million units by 2030. The rapid growth in EV adoption contributes to the rising demand for batteries, thereby driving the demand for lithium.
Corinne Blanchard, Deutsche Bank’s director of lithium and clean tech equity research, stated, “We do fundamentally believe in a shortage for the lithium industry. We forecast supply growth, but demand is set to grow at a much faster pace.” She predicts that by the end of next year, there will be a “modest deficit” of around 40,000 to 60,000 tons of lithium carbonate equivalent. However, this deficit is expected to widen significantly, reaching 768,000 tons by the end of 2030.
The potential lithium shortage poses a challenge for the global transition to electric vehicles and the overall growth of the consumer electronics industry. With China’s significant demand and other countries also increasing their EV adoption, securing a stable supply of lithium becomes crucial.
As the world becomes increasingly dependent on lithium, the search for new sources and technologies to extract and recycle lithium becomes imperative. Moreover, efforts to diversify the global lithium supply chain and reduce dependence on a few dominant producers must be accelerated.
In conclusion, the projected lithium shortage by 2025 highlights the urgent need for solutions to address the increasing demand for the mineral. As China’s demand for lithium surpasses its domestic supply, the global supply chain must adapt and expand to avoid potential disruptions in the production of batteries for consumer electronics and electric vehicles. Expanding lithium production, diversifying supply sources, and developing efficient recycling technologies are key steps in ensuring a stable and sustainable lithium supply for future demand.
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