Companies in North America are hurrying to recycle electric car batteries as a result of a little-publicized provision in the United States Inflation Reduction Act, putting the area at the forefront of a worldwide battle to challenge China’s supremacy in the industry.
The IRA has a provision that automatically certifies EV battery components recycled in the United States as American-made for subsidy purposes, regardless of provenance. This is significant because it qualifies manufacturers who employ recycled battery components from the United States for EV manufacturing subsidies.
Reporters spoke with more than a dozen industry executives and experts who claim that this is setting off a factory construction boom in the United States, driving automakers to explore more recyclable batteries, and eventually making it more difficult for customers in underdeveloped nations to buy used EVs.
China handles virtually all EV battery recycling in a global market projected to grow from $11 billion in 2022 to $18 billion by 2028, according to research firm EMR. As more EVs are introduced and age out of the vehicle fleet, that business will grow.
The minerals in those batteries—primarily lithium, cobalt, and nickel—are worth on average between 1,000 euros ($1,123) and 2,000 euros per car, BMW (BMWG.DE) sustainability chief Thomas Becker told Reuters.
Those materials could be in short supply within a few years as automakers boost EV production, but they can be recycled infinity times and not lose their power,” said Louie Diaz, vice president at Canadian battery recycling firm Li-Cycle (LICY.N), which received a $375 million U.S. government loan for a New York plant slated to open later this year. That funding helped bring forward the investment decision for the plant, Diaz said.
JB Straubel, CEO of Redwood Materials, which was awarded a $2 billion U.S. government loan in February to build out a battery material recycling and remanufacturing complex in Nevada, said the IRA treats recycled battery materials as locally “urban mined,” or materials recovered from scrap rather than obtained from mining.
That has encouraged U.S. companies to move faster on recycling efforts than their counterparts in the European Union, which has focused instead on mandates, including minimum amounts of recycled materials in future EV batteries.
Recycling firms Ascend Elements, Li-Cycle, and others are planning European plants in the next few years, but access to funding and the made-in-America incentive mean several U.S. plants are already being built.
“What it (the IRA) does is change the demand equation for battery materials,” said Mike O’Kronley, CEO of Ascend Elements, which already has one recycling plant open in Georgia and has received nearly $500 million in Energy Department grants under the infrastructure law for a plant in Kentucky slated to open in late 2023. “We need to keep those valuable materials… so we can put them right back into EVs.”
The race is on to build “closed-loop supply chains” where recycled minerals are put into locally produced new batteries, said Christian Marston, chief technology officer at Altilium Metals, which is building a plant in Bulgaria and plans one in the UK by 2026.
“Everybody wants to control their own supply chain, and nobody wants to be reliant on the Chinese,” he said.
However, China still leads the race, announcing tougher standards and increased research support for recyclers last month. After passage last year of the U.S. Inflation Reduction Act, Chinese officials described the legislation as “anti-globalisation” and accused the U.S. of “unilateral bullying.”
The race is on to build “closed-loop supply chains” where recycled minerals are put into locally produced new batteries, said Christian Marston, chief technology officer at Altilium Metals, which is building a plant in Bulgaria and plans one in the UK by 2026.
“Everybody wants to control their own supply chain, and nobody wants to be reliant on the Chinese,” he said.
However, China still leads the race, announcing tougher standards and increased research support for recyclers last month. After passage last year of the U.S. Inflation Reduction Act, Chinese officials described the legislation as “anti-globalisation” and accused the U.S. of “unilateral bullying.”
Rapid Growth
Globally, there are at least 80 companies involved in EV recycling, with more than 50 startups attracting at least $2.7 billion, virtually all in the last six years, from corporate investors, including automakers, battery makers, and mining giants like Glencore, according to PitchBook.com data.
The volume of EV batteries available for recycling should grow over tenfold by 2030, said consultant Circular Energy Storage. Around 11.3 Gigawatt hours (GWh) of batteries reached their end of life in 2022, and that should rise to 138 GWh by 2030, equivalent to roughly 1.5 million EVs, CES said.
Electric vehicle batteries can last for 10 years or more.
Some industry officials anticipate rapid growth, meaning 40% of battery materials used in new EVs could come from recycled stocks by 2040.
There is little existing U.S. recycling capacity today, and virtually none in Europe.
At a facility in Poole, southern England, car breaker Charles Trent Ltd. has built two lines where workers deconstruct wrecked or old vehicles to recycle everything. It has built special containers for EV batteries, which are sold for research or used by retrofitters to electrify fossil-fuel cars, partly because there is nowhere to recycle them.
In Europe, EV batteries are currently shredded into “black mass” that is shipped to China for recycling.
Lose Nothing
The race is on to squeeze the best price out of that black mass.
“The one who gets the highest yield at the lowest cost… will win this game,” said Bruno Thompson, CEO of Cambridge, England-based startup The Battery Recycling Company, which plans its first plant in 2024.
Dallas, Texas-based Ecobat, which shreds batteries in Europe and the U.S. for recycling elsewhere, has improved its recovery process so that around 70% of battery-cell lithium is available for recycling, said chief commercial officer Thea Soule.
Eventually, Soule said, yields should reach levels close to 90% to 100%.
Getting better yields matters because the EU will mandate minimum amounts of recycled lithium, cobalt, and nickel in EV batteries within eight years. The EU will also impose tough conditions on recycling outside Europe.
Those conditions will effectively keep recycling local, said Kurt Vandeputte, senior vice president at Belgian materials firm Umicore (UMI.BR).
There are also industry concerns about finding old EVs for recycling. Today, anywhere up to 30% of Europe’s old fossil-fuel cars disappear overseas—to new owners in developing countries or for scrap. Some automakers are trying to figure out how to keep tabs on those EVs.
Nissan (7201.T) has turned to leasing EVs in Japan to maintain control of batteries, while Chinese EV maker Nio (9866.HK) leases batteries to customers to retain ownership.
Keeping those minerals in Europe would cut off a cheaper source of transportation for developing countries.
BMW’s sustainability chief, Becker, said the value of battery materials will hopefully make recycling more attractive than selling vehicles abroad, but Europe must focus on ensuring those EV batteries do not slip away.
“We’ve got to make sure we lose nothing,” Becker said.
