With the annual production of electric vehicles (EVs) set to grow from 3.4 million in 2020 to 12.7 million in 2024, and battery production growing from 95.3GWh to 410.5GWh over the same period, demand for lithium is expected to rise from a forecasted 47.3kt in 2020 to 117.4kt in 2024 at a 25.5% compound annual growth rate (CAGR), according to GlobalData, a leading data and analytics company.

Vinneth Bajaj, Senior Mining Analyst at GlobalData, comments: “Lithium metal production is expected to reach 134.7kt versus 58.8kt in 2020. This follows a significant 18.2% decline in 2019 to 78.2kt, resulting from sluggish global EV sales and a steep fall in prices, which, in turn, encouraged reduced production levels.

“Lithium production over the next four years will be mainly supported by output from existing Australian mines such as Mount Cattlin and Pilgangoora. Other major mines include Mount Marion, Salar de Atacama and Salar del Hombre Muerto located in Australia, Chile and Argentina, respectively.”

Global demand for lithium will be driven by growth in battery manufacturing facilities, particularly in China – where lithium-ion battery manufacturing capacity is expected to increase from an estimated 388.2GWh in 2020 to 575.3GWh in 2024.

Bajaj continues: “According to GlobalData, nearly 12.7 million EVs are expected to be produced across the globe in 2024, increasing from 3.4 million in 2020. China is determined to boost EV sales, targeting a 20% share of the new car sales by 2025, versus just 5% in 2019. The country’s decision to cut subsidies in a phased manner until 2022, rather than eliminating it in 2020, is expected to provide an essential boost to the domestic market, as well as the overall global EV market.”

On its Battery Day, Tesla announced it is working towards achieving 100GWh of cell production capacity by 2022 and up to 3,000GWh by 2030. This is far greater than other manufacturers such as China’s BYD, which is expected to expand its capacity to 126GWh in 2024, versus 40GWh in 2019. Japan’s Panasonic, a key supplier to Tesla itself, is expected to increase its capacity from 40GWh in 2019 to 63GWh in 2021, while LG Chem will expand from 65.2GWh in 2019 to 172.4GWh in 2024.

Bajaj adds: “Tesla also announced a revolutionary 4680 cell design, the production of which has already begun with 10GWh of annual capacity expected through 2021. It is expected to completely change the cost dynamics of EVs by reducing the overall cost of its long range and high performance battery cells.”