Although oversupply and low prices have dominated discussions around battery raw material markets this year, significant deficits are forecast in the next ten years, according to Benchmark.

The forecast deficits are substantially higher than the current surpluses. In 2034, the lithium and nickel markets are expected to be in deficits of 572,000 tonnes and 839,000 tonnes respectively. These shortfalls are around seven times larger than the current surpluses for each material.

Benchmark analysis found that of the $514 billion of investment needed to meet battery demand in 2030, upstream projects require $220 billion. Nickel and lithium require the largest investment of any of the materials, at $66 billion and $51 billion respectively.

Benchmark’s view is that lithium will be the bottleneck for the growth of the battery industry more than any other part of the supply chain. Though more than one million tonnes of mined lithium is expected to be produced in 2024, mined supply will need to reach 2.7 million tonnes to meet demand in 2030, the majority of which is driven by the electric vehicle (EV) market.

Western governments’ desire to derisk their supply chains from China will likely grow the $514 billion figure. Lower operating costs and less stringent environmental regulations make the cost of developing refineries and factories in China lower than that of many Western countries.

The ‘great raw material disconnect’—raw material supply being insufficient for EV demand—is exacerbated by the fact mines take between five and 25 years to develop, whereas midstream and downstream facilities typically take less than five years. So while gigafactories require the largest investment of any individual component of the supply chain, upstream investment is needed now to ensure these facilities have adequate feedstock to function.