2018 is regarded as the beginning year for battery recycling as the first batch of batteries are gradually coming out of electric vehicles (EVs). Umicore has recently announced their investment plan in ramping up battery recycling capacity in preparation for the boom of spent EV batteries. By 2018, we will already have around 33,000 retired electric vehicle battery packs (including electric passenger cars and buses) which amounts to around 1GWh storage capacity. Over the next ten years, we will see an exponential growth of spent EV batteries (see the IDTechEx's brand new report on Second-life Electric Vehicle Batteries). How much of those batteries will be directly recycled at the end of their service life in electric cars?
Unlike the batteries in consumer electronics such as our laptops and mobile phones, the batteries retired from electric cars could still retain 70-80% of their initial capacity. Those batteries cannot satisfy the requirements for use in EVs anymore, for example, when the loss of battery capacity limits the driving range of the electric car, but they could provide sufficient capacity for less-demanding applications such as stationary energy storage in their 'second-life'. Global EV manufacturers including Nissan, Renault, BMW and BYD have been exploring various usage scenarios for second-life EV batteries from residential, to commercial and grid-scale applications. Nissan and power management company Eaton has launched their xStorage product using second-life LEAF batteries for stationary storage at different levels. UK-based Connected Energy has developed energy storage systems to support EV fast charging stations using second-life Renault EV batteries. In China, second-life EV batteries are replacing lead-acid batteries which are widely used in China Tower's telecommunication base stations back-up, low-speed EVs and electric two-wheelers. According to IDTechEx, by 2029, over 100GWh storage capacity could be provided by second-life EV batteries annually. How much of those batteries will be deployed for second-life applications and how will it affect the recycling industry? For more information, see IDTechEx's brand new report on Second-life Electric Vehicle Batteries.
Umicore claimed that second-life would not have an effect on the recycling demand. Anyway, all spent batteries will need to be recycled in the end. However, by having a second-life the recycling process would be delayed. How much of those batteries will have a second-life before being recycled depends on the value of recycling versus second life. Currently the revenues from extracting the raw materials from EV batteries are still lower than the cost of recycling, so recycling is at a cost today for companies who have liability of retired EV batteries. In this case, companies might choose to extract more value by repurposing a second-life for those spent batteries. And this is especially the case for lithium iron phosphate (LFP) batteries because this type of battery chemistry does not contain high value metals which makes the value of recycling very low. Moreover, LFP batteries are extensively used in electric buses in China which represents the largest sector of spent EV batteries. The leading Chinese LFP battery manufacturer BYD would prefer to let their second-life batteries sit in their industrial parks and help them generate revenues from peak-shaving and energy arbitrage or sell those batteries to China Tower as back-up power for their 2 million telecom base stations, rather than paying for them to be recycled. According to IDTechEx, whether second-life will have an impact on the battery recycling industry will depend on multiple factors: the future commodity price of raw materials, battery chemistries, the cost of recycling as well as the cost of second-life batteries and the energy storage demand. More detailed analysis can be found in IDTechEx's latest report on Second-life Electric Vehicle Batteries.
Top image: Umicore