The Supply–Demand Dynamics of Lithium Resources and Sustainable Pathways for Vehicle Electrification in China

Lithium is a critical mineral for traction batteries and a cornerstone of the sustainable transition toward low-carbon transportation. Understanding the supply–demand dynamics and resource-saving potential of lithium is essential for advancing circular economy goals and ensuring the long-term stability of the electric vehicle (EV) industry. This study develops an integrated lithium forecast framework by coupling a System Dynamics (SD) model with dynamic Material Flow Analysis (MFA) and multi-scenario pathways. To ensure robust conclusions, the model is validated against historical data, and a multi-level sensitivity analysis is conducted to address the inherent uncertainties of evolving socio-technical assumptions over a ten-year horizon. The simulation results reveal that under the baseline scenario, China’s EV stocks and annual lithium demand will grow by 8.3 and 4.7 times from 2024 to 2035, respectively. This rapid expansion poses a significant sustainability challenge, as cumulative demand will deplete 50–71% of China’s domestic lithium reserves by 2035. Despite a projected supply–demand gap of 110–120 kt/yr, the study identifies critical pathways for resource decoupling and circularity. Technology-driven interventions, such as enhancing energy density and extending battery lifespan, can reduce primary lithium demand by up to 18.9%. Furthermore, optimizing the closed-loop recycling system can contract the supply–demand gap by 31–39%, demonstrating the pivotal role of secondary resource recovery in building a resilient supply chain. Despite this reduction, a persistent reliance on international markets remains inevitable. These findings provide a quantified scientific foundation for policymakers, emphasizing that lithium security requires a synergistic transition from volume-based subsidies to resource efficiency mandates and standardized, formal closed-loop recycling systems.