We study the changes in electrodynamic responses due to Li insertion into layered α-MoO3. We compute electronic and dielectric properties, including the optical conductivity response of pure and lithiated oxides Li2MoO3, as a means to understand and reproduce the charge–discharge profiles observed in experiments. We unravel a 2-electron mechanism of Mo(VI) center reduction, which suggests Li substitution by divalent cations as a route towards cycling optimization. Along this line we provide a general paradigm for battery material characterization using first principles techniques based on optics, which can be advantageously used for example in high-throughput material screening approaches.