LITHIUM MARKET ANALYSIS

Lithium Market Size and Trends

The lithium market is estimated to be valued at USD 52.74 Bn in 2024 and is expected to reach USD 163.08 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 17.5% from 2024 to 2031.

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The demand for lithium is projected to increase at a substantial rate owing to growing applications in lithium-ion batteries. Lithium-ion batteries are increasingly being used in various end-use industries such as automotive, consumer electronics, and energy storage systems. The rising adoption of electric vehicles across the globe is a major factor driving the need for lithium-ion batteries. As more electric vehicles are sold, the demand for lithium to produce lithium-ion batteries is also expected to grow sharply. In addition, the use of lithium batteries in energy storage systems is gaining traction due to increasing renewable power generation. Thus, widespread applications coupled with rapid urbanization and industrialization will augment the growth of the global lithium market over the next few years.

Aggressive EV adoption

The growing demand for electric vehicles from both consumers and governments around the world is a major factor driving lithium demand higher. With concerns mounting around the environmental impact of gas-powered cars, major automobile manufacturers are committing sizable investments into electric vehicle production. Volkswagen alone spend nearly US$ 50 billion on EVs by 2023. Several countries have announced plans to phase out or ban sales of new internal combustion engine vehicles in the coming decade in favor of EVs. Norway, which already has the highest per capita ownership of EVs in the world, wants all new passenger vehicles sold to be zero-emissions by 2025. California plans a similar ban by 2035. The EV transition is gaining momentum and mainstream consumers are starting to embrace the technology more with each passing year. As battery packs are one of the most expensive components of an EV, their increased production and use will significantly ramp up lithium consumption for years to come.

Market Concentration and Competitive Landscape

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Energy storage demand outside transportation

Lithium battery technologies are also seeing expanding applications beyond powering vehicles. The uptake of renewable energy sources like solar and wind is rising rapidly, but their intermittent nature requires efficient energy storage solutions to balance electricity grids. Lithium-ion batteries have emerged as a preferred storage medium and their use is growing exponentially both at large utility-scale projects as well as behind-the-meter at residences and businesses with solar panels. Widespread deployment of batteries for grid energy storage could drive enormous volumes of new lithium demand. Meanwhile, consumer electronics continue advancing with more powerful devices requiring higher capacity rechargeable batteries. New opportunities are also emerging in stationary storage applications at mobile phone towers, data centers, and other commercial/industrial facilities seeking to reduce reliance on fuel-based generators. Expanding use of distributed battery storage across industries will be an influential driver propelling lithium consumption higher in the energy sector over the long run.

Key Takeaways from Analyst:

The lithium market is poised for significant growth over the next decade driven by increasing demand for lithium-ion batteries from the electric vehicle and energy storage industries. North America, currently dominates lithium production as well as the manufacturing of lithium-ion batteries. However, mining capacities in Australia are expanding rapidly to meet the rising global demand for lithium.

Higher EV adoption targets by many countries are likely to keep demand strong. On the other hand, limitations in lithium reserves and uncertainties over mining approvals could restrain supplies to some extent. Rising commodity prices may temporarily impact battery costs until efficiency improvements offset increased raw material costs. As lithium batteries achieve scale and battery chemistries diversify into lithium iron phosphate and lithium metal, costs will keep declining steadily.

Investments into the production of battery grade lithium hydroxide have increased of late as it is the preferred cathode material for high nickel batteries. Meanwhile, opportunities lie in recycling spent lithium-ion batteries to recover battery materials and reduce dependency on mining. Overall, the dynamics between demand, supply, and prices in the lithium market will evolve as the electrification of transportation steadily progresses in the coming years. To profit from this transition, vertical integration across the lithium-ion battery value chain seems a prudent strategy for both existing and new players in this industry.

Market Challenges: Volatility in lithium prices

The volatility in lithium prices has emerged as a major restraint on the growth of the global lithium market. Lithium is a key component in lithium-ion batteries which are crucial for powering electric vehicles and energy storage solutions. However, wild fluctuations in lithium prices in the past few years have introduced uncertainty for lithium producers as well as downstream customers like automotive and battery manufacturing companies.

Market Opportunities: Development of more sustainable lithium extraction technologies

The development of more sustainable lithium extraction technologies could unlock tremendous opportunities in the lithium market going forward. As lithium-ion batteries have become integral to powering various consumer electronic devices as well as electric vehicles, the demand for lithium has risen exponentially in the recent past. However, the predominant extraction methods such as open-pit mining and brine extraction have raised serious environmental sustainability concerns. This has increased the urgency to explore alternative greener extraction methods.

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Insights by Type: High demand from battery applications

In terms of type, carbonates is expected to contribute 55.7% share of the market in 2024.  This can be attributed to the huge demand for lithium carbonate from the battery industry, especially for lithium-ion batteries. Lithium carbonate is the preferred raw material for the production of lithium hydroxide which acts as a cathode material for the lithium-ion batteries used majorly in electric vehicles and energy storage systems.

With the rapid adoption of electric vehicles worldwide owing to stringent emission norms and increasing consumer inclination towards sustainable mobility options, the demand for lithium-ion batteries is witnessing exponential growth. All major automobile manufacturers are investing heavily in electric vehicles. They require large volumes of lithium-ion batteries which, in turn, boost the demand for raw materials like lithium carbonate. Several new giga-scale battery factories are also being set up by battery makers to cater to this growing demand. Moreover, the energy storage sector is expanding significantly with the increased integration of renewable energy into the grid which again drives battery needs.  The use of lithium batteries has increased multifold in consumer electronics as well with smartphones, laptops, and other portable devices depending on lithium-ion technology. This sustained usage of lithium-based batteries across multiple industries has cemented lithium carbonate's position as the key crude lithium material. Ongoing lithium carbonate production expansion projects indicate that it will continue dominating the lithium market by type in the future as well, underpinned by unabated demand upsurge from batteries.

Insights by Application: Automotive contributes the highest share to the lithium market by application

The automotive segment is expected to account for 40.5% share of the lithium market in 2024. This primacy of the automotive sector stems from the pressing need to decarbonize transport worldwide and shift towards electric mobility. With stringent government mandates targeting internal combustion engine phase-out and promotion of electric vehicles, automakers are vigorously scaling up their EV manufacturing capacities.

Major vehicle makers have committed huge investments and announced roadmaps to broaden their electric model lineups. On the supply side, battery gigafactories are coming online one after the other to support this electric transition. Since lithium-ion batteries form the main power source for EVs, their increased production and deployment drives robust lithium demand from the automotive industry. Moreover, as EVs displace gasoline vehicles, the need for lithium as a raw material for EV batteries is projected to grow manifold over the long-term. Countries have unveiled time-bound targets to phase-out ICE vehicle sales and incentivize EV adoption. The race is on between automakers to cater to this budding EV customer base and gain greater market share. Their aggressive EV manufacturing and marketing strategies will sustain elevated lithium consumption from the automotive segment. Additionally, ride-hailing electric fleets and commercial electric trucks/buses are emerging applications augmenting demand from this key end-use sector.

Regional Insights

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North America has established itself as the dominant region in the global lithium market. The region is expected to account for 35.7% of the market share in 2024. The U.S. is a key lithium importing nation and has consistently remains among the top three importers of lithium chemicals globally. The region is also a hub for lithium-ion battery production with major battery and EV manufacturers based in the U.S. and Canada. Several mining companies have lithium operations across states like Nevada, California, and Idaho, ensuring strong domestic supply. Moreover, the supportive policies for EVs and energy storage by the U.S. and Canadian governments are promoting investments in lithium mining and battery manufacturing capacities.  The growing adoption of EVs and emphasis on decarbonization of transportation are projected to significantly boost lithium chemical demand in North America. Several automakers have announced billions of dollars of investments towards expanding their EV lineups, which will require a large and consistent supply of battery-grade lithium. The stable political environment and availability of skilled workforce make North America an attractive destination for building lithium-ion supply chains. Though import-reliant, efforts are ongoing to develop additional lithium resources and processing facilities. Security of lithium supply remains a priority for major economies in the region.

On the other hand, Asia Pacific has emerged as the fastest growing market for lithium globally. China, in particular, has established a dominant position across the lithium-ion battery and EV value chain in recent years. Several Chinese lithium producers such as Ganfeng Lithium and Tianqi Lithium have expanded operations overseas through acquisitions to boost exports and ensure security of supply. Meanwhile, countries like South Korea and Japan are also ramping up investments in lithium mining and battery cathode material projects, underscoring Asia Pacific's rise. The favorable policies supporting the adoption of new energy vehicles and energy storage systems in the region have been a major growth driver. With a large lithium-ion battery manufacturing capacity and burgeoning domestic EV market, Asia Pacific's leadership in the lithium market is likely to strengthen further over the coming years.

Market Report Scope

Lithium Industry News

• On July 13, 2024, IBAT launched a new lithium extraction technology in Utah
• In January 2024, Bolivia launched a new international tender for lithium extraction
• In March 2024, Stryten Energy launched a new line of lithium batteries at MODEX 2024
• In 2023, Exxon Mobil Corporation announced plans to become a leading producer of lithium, a key component of electric vehicle (EV) batteries

*Definition: The lithium market involves the production, extraction, refining, and manufacturing of lithium materials that are primarily used to produce batteries and energy storage solutions. Lithium is a key component in lithium-ion batteries that power devices like electric vehicles, smartphones, laptops, and others. The lithium market has experienced significant growth in recent years due to the rising popularity and demand for electric vehicles and consumer electronics. Major players in the lithium market mine lithium from deposits around the world and process it into useful materials and chemicals for the battery and energy industries.

Market Segmentation

•  Type Insights (Revenue, USD Bn, 2019 - 2031)
  • Carbonates
  • Hydroxide
  • Others
•  Application  Insights (Revenue, USD Bn, 2019 - 2031)
  • Automotive
  • Consumer Electronics
  • Grid Storage
  • Glass & Ceramics
  • Others
• Regional Insights (Revenue, USD Bn, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC Countries
    • Israel
    • Rest of Middle East & Africa
• Key Players Insights
  • Albemarle Corp.
  • Ganfeng Lithium Co., Ltd.
  • SQM S.A.
  • Tianqi Lithium Corporation
  • Livent Corp.
  • Lithium Americas Corp.
  • Pilbara Minerals
  • Orocobre Limited Pty. Ltd.
  • Mineral Resources Group Co., Ltd.
  • Avalon Advanced Materials Inc.
  • Sichuan Yahua Industrial Group Co. Ltd
  • Morella Corporation Limited
  • Mineral Resources
  • Ganfeng Lithium Co. Ltd
  • Allkem Limited