DALLAS, Texas – Exxon Mobil Corporation (NYSE: XOM) announced today its ambitious plan to become one of the world’s largest producers of lithium by 2030, as electric vehicle adoption continues to accelerate globally. The oil and gas giant aims to leverage its expertise in large-scale extraction projects to establish a major presence in the rapidly growing lithium market over the next decade.
Shares of Exxon Mobil were trading higher on Monday following the announcement that work has commenced on the company’s first phase of lithium production in southern Arkansas. Exxon Mobil recently acquired the rights to over 120,000 acres of the lithium-rich Smackover formation in the state, with plans to begin commercial production by 2027.
“Lithium is essential to the energy transition, and ExxonMobil has a leading role to play in paving the way for electrification,” said Dan Ammann, President of ExxonMobil Low Carbon Solutions. “This landmark project applies decades of ExxonMobil expertise to unlock vast supplies of North American lithium with far fewer environmental impacts than traditional mining operations.”
Surging Demand for Lithium
Lithium is a vital component in lithium-ion batteries, which power electric vehicles, smartphones, laptops and energy storage systems. According to Exxon Mobil, global demand for lithium is expected to increase four-fold by 2030 as electric vehicle sales continue to accelerate. With major automakers like General Motors and Volkswagen announcing ambitious electrification targets, lithium demand is poised for exponential growth over the next decade.
The International Energy Agency predicts that EV sales will rise from 6.6 million in 2021 to over 60 million by 2030 under its stated policies scenario. EV battery manufacturing capacity is also expected to expand rapidly, reaching up to 5,000 gigawatt-hours (GWh) by the end of the decade, compared to just over 1,000 GWh currently.
This astounding demand growth is driving lithium prices higher, with lithium carbonate prices in China more than tripling over the last year to record highs. Securing reliable long-term supplies of battery-grade lithium has become a top priority for automakers as they ramp up EV production.
Major Investment in Lithium Production
Exxon Mobil’s move into lithium production comes at an opportune time when demand is surging. The company said it ultimately plans to produce lithium volumes capable of supporting over one million EVs per year by 2030.
The first phase of the project in Arkansas involves building a multi-billion dollar facility to extract lithium from brine. Exxon Mobil said its advanced technology can produce lithium with a third of the greenhouse gas emissions of traditional lithium mining methods. The company expects to start producing lithium hydroxide in 2027 and reach commercial production by 2028.
Additionally, Exxon Mobil created a new business called ExxonMobil Lithium to bring its branded lithium products to the battery supply chain. The company believes its technical expertise and experience with managing large-scale resource extraction projects gives it a competitive edge to become a low-cost lithium producer.
Analysts say Exxon Mobil’s size and scale could allow it to ramp up production faster than existing lithium suppliers. The company’s move also highlights the opportunity for U.S. oil companies to leverage their core capabilities to establish a domestic lithium supply chain as EV adoption accelerates. Government initiatives to onshore more battery supply chain elements could further support production growth.
Potential Impact on Lithium Industry
Exxon Mobil’s entry as a major lithium player has the potential to disrupt the lithium industry landscape. Most of the world’s lithium currently comes from Australia and South America, where it is extracted from underground brine using evaporation ponds or hard rock mining.
The lithium industry is currently concentrated among a handful of major producers like Albemarle, SQM and Livent. Exxon Mobil’s lithium volumes by 2030 could rival the production of the existing top producers today, introducing more competition.
More supply coming online could help improve battery supply chain resilience and contain rising prices. However, ramping up production too fast runs the risk of oversupply if EV adoption slows. Maintaining a responsible production pace that matches demand growth will be key.
Exxon Mobil’s background as an oil and gas producer could also raise environmental concerns around its lithium extraction methods. The company will need to adhere to best practices around brine extraction and demonstrate its commitment to sustainable production. Responsible and low-impact lithium production will be vital to avoid community opposition.
Overall, Exxon Mobil’s move into lithium has the potential to transform the industry and catalyze greater investment in domestic lithium production. While risks exist, the company’s lithium strategy aligns with the broader energy transition and could position it for long-term growth as global EV adoption accelerates.