ExxonMobil (XOM -2.78%) believes the world will need oil and gas for a long, long time. That drives its current investment strategy of investing billions of dollars annually to develop new oil and gas supplies.

However, Exxon can see the writing on the proverbial wall. It knows the world is slowly transitioning to lower-carbon energy, including electric vehicles (EVs) powered by renewables. That's leading the energy company to invest more money into transitioning its business for a lower-carbon world. It recently unveiled bold plans to become a leading lithium producer by 2030. Lithium is a key ingredient in EV batteries.

Drilling for another resource

ExxonMobil has already started working on the first phase of a lithium-production project in Arkansas, which holds vast lithium resources. It expects that project to start production by 2027. It will likely be the first of many for the energy giant, which is evaluating other lithium opportunities worldwide. The company aims to produce enough lithium by 2030 to power more than 1 million EVs annually. It will sell its lithium product under the Mobil Lithium brand.

The energy company secured the rights to over 120,000 acres in southern Arkansas earlier this year. This land sits above the Smackover Formation, which holds North America's most abundant lithium resources.

Exxon will apply traditional oil and gas drilling methods to extract lithium-rich saltwater from that formation, which is about 10,000 feet below the earth's surface. Exxon will then utilize direct lithium extraction (DLE) technology to separate lithium from saltwater. The company will reinject the saltwater into the formation while converting the lithium into a battery-grade material. This production process requires less land and produces fewer emissions than hard-rock mining.

A potentially massive growth driver

While Exxon believes oil and gas will remain vital fuels for decades, demand growth is nearing an end. According to the International Energy Agency (IEA), oil and natural gas demand will peak by 2030 and plateau at that level for the next two decades. The rise in EVs is a big driver of that view. The IEA expects that there will be almost 10 times the number of electric cars on the road by 2030 as there are today.

That outlook suggests Exxon will need to find a new growth engine by the end of this decade. Lithium certainly fits the bill. Exxon noted that demand for the mineral will quadruple by 2030, powered by the growth in EVs. That drives Exxon's view that there should be many opportunities to invest in new lithium projects in the coming years. The company noted that it's evaluating growth opportunities worldwide. It's also discussing lithium-supply agreements with potential customers, including EV and battery manufacturers.

Lithium adds to Exxon's growing low-carbon business platform. The oil giant is an emerging leader in providing carbon-capture solutions. It recently bolstered those ambitions by acquiring Denbury Resources in a $4.9 billion deal. Exxon now has the country's largest owned and operated carbon dioxide pipeline network and access to several strategically located sequestration sites. Exxon believes it now has the capability to reduce carbon dioxide emissions by more than 100 million tons per year. That's 20 times bigger than its current business, which is already equivalent to replacing 2 million gas-powered cars with EVs.

The energy giant is also investing in other low-carbon technologies like hydrogen, ammonia, biofuels, and direct air-capture projects. These lower-carbon investments position Exxon to continue growing its earnings beyond 2030 when demand for oil and gas will peak.

Adding a new power source to its growth engine

Oil and gas projects have fueled Exxon's growth over the decades. However, with demand for fossil fuels nearing its peak, Exxon needs to transition to another power source to continue growing. It sees lithium as a potentially powerful growth driver, given the exponential demand growth ahead for that key EV battery component. That's driving Exxon to invest in becoming a leader in lithium by the end of this decade. These investments in lithium and other low-carbon technologies make Exxon look like a much more compelling long-term investment opportunity.