Through additive manufacturing (AM), it is now possible to produce functionally gradient materials (FGM) by depositing different metal alloys at a specific location to locally improve mechanical properties and enhance product performance. Despite recent developments, however, there are still some important trade-offs to consider and inherent challenges that must be addressed. These include limitations to the volume, size, and range of materials used and a data-driven strategy to drive decision-making and automation. Additionally, many potential advantages exist in environmentally sustainable terms of multi-material additive manufacturing (MM-AM). In particular, for products that require a complex design, high value, and low production volume, material and energy use can be reduced significantly. However, there are significant uncertainties in terms of environmental impact and applications of MM-AM that need to be addressed during the initial stage of the technology development to understand its potential future environmental performance improvements.