Companies globally are investing heavily in battery recycling due to anticipated raw material shortages for electric vehicles (EVs). This includes automakers, battery manufacturers, and miners either enhancing their recycling capabilities or partnering with specialists. Their aim is to bolster supply chains, reduce environmental impacts, and increase profitability. However, there’s uncertainty regarding future recycling processes, regulations, materials pricing, and ownership of used EV batteries.
Andreas Breiter of McKinsey’s Centre for Future Mobility highlights the looming challenge of managing the increasing number of used EV batteries in the coming years. Currently, most recycled battery materials come from products like laptops or production scrap from battery plants. By 2040, with EV sales rising, the recycling emphasis will shift from manufacturing scrap to end-of-life batteries.
The recycling industry faces challenges, including which recycling processes to adopt and how to ensure recycling remains environmentally friendly and cost-effective. The logistics for recycling manufacturing scrap, which can be processed nearby to battery production facilities, differ from the recycling of end-of-life batteries, which require collection from vehicles and safety evaluations.
Recycling collaborations are emerging, like the partnership between recycling start-up Redwood Materials and Panasonic. Meanwhile, strategies are being considered for battery ownership, like leasing a battery throughout its lifecycle.
China leads in EV battery recycling, with closed-loop partnerships such as CATL, Mercedes-Benz China, and recycling group GEM. Similar systems are being explored in the U.S. However, some believe that used batteries could be repurposed for other energy needs before recycling.
With the battery recycling market still evolving, companies must decide on their strategies: proximity to battery makers or closer to where end-of-life batteries are available. Evolving technologies and politics, especially in Europe and the U.S., will also influence the industry. As Western countries aim to reduce dependence on China for materials and tech, the EU has introduced measures to promote a circular economy in batteries.
Chinese recyclers are currently ahead in technology and are seeking partnerships in the European and North American markets. The type of battery—lithium iron phosphate (LFP) dominant in China or nickel-manganese-cobalt (NMC) popular in Korea and Japan—could also impact the recycling landscape due to differences in material value and recycling margins.
In conclusion, the future of battery recycling holds many uncertainties, including evolving technologies, regulations, and market dynamics. The commercial viability of recycling will be shaped by these factors.
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