Although recycling presents a substantial opportunity, it is currently underrealized. Only around 5% of li-ion batteries are recycled at present, and some 11m tons of li-ion batteries will be discarded by 2030, according to Bloomberg NEF.
The market for recycling holds huge potential, but it is constrained by several factors: not all battery chemistries are equally suited to recycling, and there is a wide range of different chemistries and battery pack types currently in use. Furthermore, the process itself is complex and expensive: commercial smelting produces a mixed product from which the vital lithium must then be extracted via further treatment at additional cost. The economics are therefore not favorable at present (the value of raw material reclaimed is approximately one-third of the cost).
As the supply of EV batteries requiring recycling grows, the commercial incentive will result in overcoming many of the current costly complexities in recycling. Even now, there are startups and process innovators working on much-improved recycling technologies with 90%-plus retrieval rates for key minerals lithium and cobalt.
However, to be most effective and efficient, the standardization of battery types will be required at an industry level, and batteries will need to be designed with recycling in mind from the start.
Regulation could help shape the market
Regulatory changes tend to put the onus for dealing with spent EV batteries on the automaker – such rules are already in place in China, the EU and several US states, including California, Minnesota and New York.
US federal law only mandates recycling of nickel-cadmium and lead-acid batteries. Only some US states have disposal requirements for li-ion batteries. European regulations require the makers of batteries (including carmakers) to finance the costs of collecting, treating and recycling all collected batteries. China has also passed interim rules making carmakers responsible for recovery and recycling of batteries.
What to expect
It should be clear by now that no single player, however large, can provide the very broad range of capabilities and expertise that battery life cycle management requires.
For starters, wondering how they should proceed and what to expect, there are several initiatives underway that point to the likely shape of things – and business models – to come.
Automakers are looking at various approaches to harness the opportunities presented by the emerging value chain. These range from establishing in-house energy businesses, to developing a three-stage circular economy model for their batteries with partnerships covering reuse and recycle applications.
The battery life cycle management space is also witnessing the emergence of startups that are partnering with automakers and managing the EV battery (on behalf of the automaker) across its life, looking at aspects such as repair, repurposing, recycling and logistics management of batteries.
This neatly demonstrates the diversity of approaches and partnerships and the collaborative thinking that is required to make battery life cycle management a reality.
Companies must identify and develop suitable commercial partners, whether they be small innovative startups or large established corporates. And, they shouldn’t forget to invest in the future through cross-sector industry and academic R&D collaborations.
Several other automakers across the world have repurposing deals where second-life batteries are being used for many applications, including renewable energy storage, grid stabilization, power backup and EV charging.
Still others are working with recyclers, while some are putting in place long-term supply deals to secure either battery supplies and/or access to raw materials.
Although it is still early on in terms of the widespread industry application of battery life cycle management, the number of these initiatives will only increase. They will also become more integrated and scalable as new markets and players evolve.