Lithium deficit to last at least 5 years, imperiling EV goals

Surging demand for EVs and energy storage will deepen the deficit in lithium supplies for at least the next five years — and spur shortfalls in cobalt and nickel in as little as three years, according to data from S&P Global Commodity Insights shared with Axios.

Why it matters: Startups may be experimenting with different battery chemistries, but there remains no viable alternative to lithium. These raw material shortages will prevent automakers and governments from achieving ambitious EV goals.

• "There is no commercial opportunity to move away from lithium at this point," Scott Yarham, a regional pricing director for S&P GCI, tells Axios.

By the numbers: Lithium demand last year outstripped supply by about 5,000 metric tons of lithium carbonate equivalent, Kevin Murphy, principle analyst for metals & mining research at S&P GCI, tells Axios.

• That deficit is on track to surge by 10-times, to 50,000 metric tons in 2026.

The big picture: That's a big problem for EVs.

• "For electric vehicles and the long term, the supply chain remains the primary hurdle we see through 2030," Anne Robba, a manager with Future Energy Signpost at S&P GCI, tells Axios.
• "OEM targets for EV supply as a collective are not attainable due to upstream supply chain constraints and consumer demand," Robba says.

Meanwhile, EV sales in March were up 61% year-over-year.

• Ford Motor Company says it expects its EVs to account for half the automaker's sales by 2030, while GM is aiming to exclusively sell EVs by 2035.

What's next: A rush to stockpile lithium — and hard choices for how best to deploy it.

• Expect to keep hearing about lithium recycling — with caveats: Per a 2020 white paper from the International Council on Clean Transportation, recycling could reduce the cumulative use of raw materials by 25% as a percentage of known global reserves — a significant reduction, but a far cry from being able to displace mining.