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.

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.