Demand for lithium from the EV industry is growing rapidly as the energy transition moves forward. One of the interesting things for the U.S., is that the production of EV batteries for this industry is being onshored, partly due to the growing market and partly due to provisions of the recently enacted IRA place sourcing requirements for EV components and critical minerals. However, one challenge the U.S. faces is supplying lithium for this growing battery market. The U.S. Department of Energy is working towards advancing lithium production and new chemistries may affect some lithium usage, but lithium remains a highly desired commodity in the U.S. and abroad.
Growing demand
The demand for batteries continues to grow throughout the world, largely due to the booming EV industry (Exhibit 1). In 2021, LIBs comprised approximately 40% of the battery market and is expected to grow to 63% of the market by 2030. Over the same time, Exhibit 2 shows that market penetration for EVs in the U.S. is expected to grow from 4% to 54%, driving up demand for lithium-ion batteries.
Exhibit 1: Global battery demand in GWh (Source: JP Morgan, ADI Analytics)
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