Global demand for lithium is expected to rise from an estimated 47,300 tonnes in 2020 to 117,400 tonnes in 2024, according to a GlobalData report.
Vinneth Bajaj, a senior mining analyst for GlobalData, said the increased demand would drive a corresponding upturn in lithium production over the same period.
"Lithium metal production is expected to reach 134,700 million tonnes versus 58,800 million tonnes in 2020," Bajaj stated in the report. "This follows a significant 18.2% decline in 2019 to 78,200 million tonnes, resulting from sluggish global EV [electric vehicle] sales and a steep fall in prices, which, in turn, encouraged reduced production levels."
According to Bajaj, lithium production over the next four years will be supported by existing operations, including Galaxy Resources' (US-OTC: GALXF) Mount Cattlin and Pilbara Mineral's (US-OTC: PILBF) Pilgangoora mines in Australia; Wealth Mineral's (TSXV: WML) Salar de Atacama mine in Chile; and FMC Lithium's (NYSE: LTHM) Salar del Hombre Muerto mine in Argentina.
Lithium demand, the mining analyst said, will be driven by a surge in EV sales, with annual production expected to surge from 3.4 million vehicles in 2020 to 12.7 million in 2024, and a corresponding surge in lithium-ion battery production, which is forecast to rise from 95.3 gigawatt-hours (GWh) in 2020 to 410.5 GWh over the same period.
Bajaj said that China will lead the global demand, with an increase in battery manufacturing capacity from an estimated 388.2 GWh in 2020 to 575.3 GWh in 2024, and increased EV sales.
"China is determined to boost EV sales, targeting a 20% share of the new car sales by 2025, versus just 5% in 2019," Bajaj said. "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."
At Tesla's Battery Day on Sept. 22, CEO Elon Musk announced the company's aim to achieve 100 GWh of battery cell production capacity by 2022 and up to 3,000 GWh by 2030.
According to Bajaj, this is far greater than other manufacturers such as China's BYD, which is expected to expand its capacity to 126 GWh in 2024, up from 40 GWh in 2019. Japan's Panasonic, a key supplier to Tesla, is expected to increase its capacity from 40GWh in 2019 to 63GWh in 2021, while LG Chem will expand from 65.2 GWh in 2019 to 172.4 GWh in 2024.
"Tesla also announced a revolutionary 4680 cell design, the production of which has already begun with 10GWh of annual capacity expected through 2021," Bajaj stated. "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."