Institutional warning: Lithium carbonate prices rose 20% this week; lithium supply gap may appear as early as 2028.

Recently, lithium carbonate prices have surged. According to data from Shanghai Metals Market (SMM) and research reports, the price of industrial-grade lithium carbonate rose nearly 20% weekly, reaching 170,000 yuan/ton; battery-grade lithium carbonate prices also fluctuated between 155,000 and 180,000 yuan/ton, a significant rebound from the lows at the end of 2025. This price level has directly driven a significant increase in the production cost of battery cells. Energy storage price surge: Cells lead the rise, systems follow, both volume and price increase!

According to Wood Mackenzie's latest "Lithium Industry Energy Transition Outlook" report, under a scenario of accelerated energy transition, global lithium demand may exceed 13 million tons by 2050, more than double the baseline scenario forecast. Without substantial new investment, a supply gap could appear as early as 2028.

Even under Wood Mackenzie's baseline scenario forecast, existing supply projects will struggle to meet demand beyond the mid-2030s, highlighting the necessity of continued investment across the entire value chain.

Allan Pedersen, Research Director at Wood Mackenzie, stated, “The lithium market will enter a period of supply shortages much earlier than many in the industry anticipated. Under a positive climate scenario, we expect a supply gap to appear as early as 2028. If governments pursue net-zero emissions policies, the industry must act now. Projects approved today will determine the market balance during this crucial period of the 2030s.” Electrification Drives Demand Growth Wood Mackenzie has developed four energy transition pathway models. In the delayed transition scenario, lithium demand will reach 5.6 million tonnes of lithium carbonate equivalent (LCE) by 2050; under the net-zero emissions scenario, this figure will reach 13.2 million tonnes of LCE.

- In the delayed transition scenario, the market will remain well-supplied until 2037, after which a supply gap will appear.

- In the national commitment scenario, the gap will appear around 2029, requiring an additional 6.7 million tonnes of LCE to meet projected demand by 2050.

- Under the net-zero emissions scenario, the supply gap is projected to begin appearing in 2028 and continue until mid-century. An additional supply of approximately 8.5 million tonnes of lithium carbonate equivalent is expected by 2050.

Across all scenarios, electric vehicles (EVs) will remain the primary driver of demand growth, accounting for 72% to 80% of total lithium consumption. Under the national commitment scenario, EV penetration will reach approximately 75% by 2040, and 95% under the net-zero emissions scenario.

The report also indicates that by mid-century, rechargeable batteries across all applications will account for 96% to 98% of total lithium consumption.

“Electric vehicles remain the primary driver of lithium demand growth, but energy storage systems (ESS) are also a significant contributor,” said Rebecca Grant, senior research analyst at Wood Mackenzie. “In our forward-looking scenario, demand for ESS will grow at a rate of 6% to 7% annually as renewable energy dominates new power capacity installations and the grid requires massive flexibility.” Rapid demand growth will necessitate substantial new supply.

Under the national commitment scenario, the supply gap will reach 6.7 million tonnes of lithium carbonate equivalent by 2050. Under the net-zero emissions scenario, this gap will widen to 8.5 million tonnes of lithium carbonate equivalent. Recycling will increase supply, but is unlikely to solve the near-term shortage.

Recycled supply will grow at a rate of 13% to 16% annually, with significant recycled supply emerging in the 2040s as electric vehicle batteries reach the end of their lifespan.

Wood Mackenzie notes that under a positive scenario, recycling will contribute 2.3 million to 2.7 million tonnes of lithium carbonate equivalent by 2050.

Meeting Demand Requires Unprecedented Investment

According to Wood Mackenzie estimates, total investment needs are approximately $104 billion under a delayed transition scenario; under a net-zero emissions scenario, this figure would reach $276 billion.

Investment Needs Under Different Scenarios: Delayed Transition: $104 billion; Base Scenario: $114 billion; National Commitment: $236 billion; Net-Zero Emissions: $276 billion

Investment is projected to peak between 2030 and 2034, driven by new mining capacity, refining infrastructure, and regional supply chain needs.

"Depending on how the energy transition unfolds, this will be an investment story of $100 billion to $275 billion," Grant stated. "Players who can allocate capital efficiently while addressing trade fragmentation and ensuring regional market access will be the winners."

The conclusion remains consistent across all scenarios: lithium is indispensable for the energy transition, and the industry faces structural supply challenges requiring immediate action.

Pedersen concluded, "Whether we follow the 1.5°C temperature control path or some other less ambitious path, lithium demand will exceed current supply plans. The question is not whether we need more lithium, but whether the industry can quickly mobilize capital to meet demand in an increasingly fragmented global trade environment."