Navigating Sustainability: Electric Vehicle Growth and Battery Recycling Opportunities

Introduction

The electric vehicle (EV) revolution is currently reshaping the automotive industry, with global EV sales experiencing a 40% surge in the past year. This impressive growth signals the onset of a transformative era characterized by an unprecedented demand for EV batteries. In this article, we look into the multifaceted landscape of sustainability, exploring its intricate interplay with the rapidly expanding EV market. Additionally, we examine the emerging opportunities within the realm of battery recycling, an essential component in sustaining the momentum of the clean energy movement.

Our Commitment to Sustainability

Nomura Research Institute America (NRI-A) stands firmly committed to advancing sustainability across industries. Our expertise spans a wide range, encompassing renewable energy, manufacturing, automotive, and battery recycling technologies. By leveraging strategic partnerships, innovative solutions, and data-driven strategies, we empower companies to align their operations with their sustainability and efficiency goals, fostering environmental responsibility while seizing the myriad opportunities inherent in the clean energy sector.

Previous Impactful Projects

1. Strategic Electric Vehicle Market Research and Expansion: We supported a leading automotive company committed to expanding its presence within the electric vehicle (EV) market. By employing a rigorously data-driven approach, we undertook a comprehensive market analysis, encompassing competitive dynamics and regulatory frameworks across global markets. Our advisory services delivered strategic insights, empowering the client to embark on new EV initiatives with confidence, thereby making significant contributions to the expansion of the EV industry.
2. Sustainable Supply Chain Optimization Research for EV Manufacturer: Our advisory team at NRI-A established a closely integrated partnership with a Fortune 500 EV manufacturer deeply dedicated to sustainability and operational excellence. Employing meticulous research methodologies, we conducted a comprehensive assessment of their global supply chain operations, identifying opportunities for carbon emissions reduction, heightened operational efficiency, and the assurance of ethical sourcing practices. Our research-driven recommendations acted as a guiding beacon, supporting the client’s endeavor to streamline their supply chain operations, resulting in tangible environmental benefits and an elevated corporate responsibility profile.
3. Advanced Battery Recycling Research and Advisory Initiative: In collaboration with a multinational corporation at the forefront of innovation, our research-driven consultancy played a pivotal role in supporting the development of an advanced battery recycling program. Through rigorous research and collaborative efforts with key industry stakeholders, including battery manufacturers and recyclers, we facilitated the creation of a comprehensive roadmap for the responsible collection, recycling, and repurposing of batteries, thereby contributing to the sustainable future of the industry.

Overview
The acceleration of the global transition towards electric mobility has set in motion a remarkable surge in demand for EV batteries. The global energy storage market is on track for significant growth, with projections indicating a 15-fold increase by 2030. As of the end of 2021, there were 27 gigawatts (GW) of storage capacity online, but this is expected to surge to a cumulative 411 GW (equivalent to 1,194 gigawatt-hours) by the end of the decade. Additionally, more than 100 million vehicle batteries are poised for retirement in the coming decade. While this monumental shift towards electric mobility is driven by both environmental sustainability and consumer preferences, it necessitates the establishment of efficient, robust, and eco-conscious supply chains. This, in turn, presents numerous opportunities for both Original Equipment Manufacturers (OEMs) and third-party entities to spearhead advancements in the battery recycling market.

Key market drivers for the lithium-ion battery (LIB) recycling market include the rising demand for EVs and sustainable energy solutions, while notable restraints encompass technical challenges in recycling processes and regulatory complexities.

1. LiB Market Expansion: Government subsidies, Zero Emission Vehicle (ZEV) incentives, and Corporate Average Fuel Economy (CAFE) regulations are pivotal drivers for the electric vehicle (EV) market, creating increased demand for LiB recycling services. Additionally, Original Equipment Manufacturers (OEMs) are strategically pursuing electrification, necessitating efficient LiB recycling solutions.
2. Regulations and Safety: Compliance with regulations, especially those requiring minimum levels of recycled content in the EU by 2030, is crucial for the LiB recycling industry. Ensuring safety and traceability throughout the LiB lifecycle is essential for both environmental responsibility and maintaining public trust.
3. Balance Between Reuse: Finding the right balance between reusing LiBs, which is often more profitable from an OEM’s perspective, and recycling is a challenge. This balance is crucial for maximizing resource efficiency while minimizing waste.
4. Technology and Investment: The growth of LiB recycling hinges on strategic investment, enabling recyclers to obtain the scale necessary for competitiveness. Operational excellence in processes like transportation, dismantling, and metallurgical recovery is vital. Automation, particularly in dismantling, reduces labor costs and boosts efficiency.
5. Cost Structure and Profitability: Achieving economies of scale is fundamental for profitability in LiB recycling. Automation and efficient dismantling processes reduce labor costs. Investments in after-treatment of toxic gasses and managing energy costs, including electricity consumption, are essential for financial sustainability.

Battery Recycling’s Role in Sustainable Electrification

Battery recycling plays an instrumental role in facilitating the sustainable transition from internal combustion engines to electric vehicles. Battery recycling plays a crucial role in sustainable electrification, and its annual revenues are projected to reach USD 10.45 billion by 2030. This has captured the attention of automotive and battery OEMs, as well as astute investors. As this industry continues to evolve, securing continued supplies, fostering strategic partnerships, and embracing technological innovation will distinguish the leaders in the battery recycling market. The journey towards scaling the EV supply chain is increasingly taking a circular route, underscoring the pivotal role of recycling in enabling sustainable electrification.

Sources of Recycling Materials and Trends

In regions experiencing substantial EV transitions, such as China, Europe, and the United States, a significant portion of recyclable battery materials still originates from consumer electronics cells and scraps generated during cell manufacturing. In markets where EV battery production is flourishing, production scraps can drive up to 30 percent of the recycling volume. In regions where EV adoption is thriving, such as China and Europe, end-of-life EV batteries emerge as a substantial source. However, on a global scale, production scraps are expected to remain the primary source of battery materials for recycling until 2030 when end-of-life EV battery volumes are projected to surpass them.

Battery Recycling Pathway

Drivers of EV Battery Recycling Growth

Several factors are propelling the rapid growth of the battery-recycling industry:

• Technological Advancements: The upscaling and maturation of recycling processes have led to heightened recovery rates, diminished greenhouse gas emissions, and enhanced economic viability. Government grants geared toward research and innovation, such as the European Union’s European Battery Alliance and the U.S. National Science Foundation’s Phase II Small Business Innovation Research grants, are expediting progress in recycling technology.
• Battery Recycling Technologies and Innovative Breakthroughs: Currently, two primary battery recycling pathways are in use, complemented by innovative methods in various stages of development:
  • Hydrometallurgical Processing: This method involves comprehensive treatment of the screened black mass with acids to dissolve metals. A series of steps, including solvent extraction, crystallization, and segregating different metal ions, which can then be harnessed to produce battery-ready materials such as nickel sulfate or lithium carbonate.
  • Pyrometallurgical Processing: Pyrometallurgical recycling often entails the smelting of batteries in a furnace to recover cobalt, nickel, and copper as an alloy, with other components ending up as slag. Subsequently, the alloy undergoes hydrometallurgical refining to extract raw materials for battery production.
• Supply Chain Stability: Automotive manufacturers and battery producers are actively striving to secure a stable supply of locally sourced (recycled) raw materials. Evidently, this is reflected in partnerships such as Volkswagen’s collaboration with Redwood Materials and General Motors’ affiliations with Li-Cycle and Cirba Solutions.
• Raw materials play a pivotal role in shaping the EV battery recycling market. The availability and cost of essential materials like lithium, cobalt, and nickel directly impact the economics of recycling operations. As the demand for electric vehicles rises, securing a stable supply of these materials becomes crucial for both manufacturing and recycling. Fluctuations in raw material prices can significantly influence the attractiveness of recycling as an environmentally friendly and cost-effective solution. Innovations in recycling technologies and the development of sustainable supply chains for these materials are key factors in ensuring the growth and sustainability of the EV battery recycling market.

Given the prevailing state of the battery supply chain, with natural resources taking center stage, manufacturers are diligently seeking sustainable solutions to ensure the seamless sourcing and maintenance of their supply chains.

• Regulatory Incentives: Regulatory frameworks like the U.S. Inflation Reduction Act of 2022 offer substantial tax credits for recycled battery materials, irrespective of their original source.
• Regulatory Pressure: Initiatives on the regulatory front, such as the EU’s End-of-Life Vehicles Directive and the Fit for 55 package, mandate automotive manufacturers to take responsibility for end-of-life batteries. These regulations also stipulate transparency regarding battery carbon footprints, set recycling targets, and establish minimum recycled content requirements for newly manufactured batteries. Parallel initiatives in California and Texas are poised to further bolster battery recycling endeavors.

Success Factors for Battery Recyclers

While the battery recycling market is experiencing rapid expansion, it has yet to reach full maturity, and market leadership continues to evolve. Key strategies that battery recyclers can employ to gain a competitive edge encompass:

• Ensuring Supply Access: Battery recyclers should secure a substantial volume to achieve meaningful scalability in the short term, alongside future growth potential through contractual arrangements with battery-cell producers and automotive OEMs.
• Cultivating Cross-Value Chain Partnerships: Exploring cross-value-chain ecosystems empowers recyclers to offer compelling end-to-end solutions to automotive OEMs.

Investing in Technological Advancements: Recyclers should focus on demonstrating impressive material recovery rates, superior product quality, and operational efficiency. Collaboration with OEM R&D teams can aid in aligning technology investments with the evolving landscape of battery chemistry and design trends, streamlining recycling processes, and enhancing profitability.

The Path to Industry Growth

The battery recycling sector stands at the precipice of substantial growth, with revenues spanning the entire value chain, from collection to metal recovery. This growth trajectory is primarily underpinned by the prices of recovered metals, the evolution of battery cell chemistry, and the regionalization of supply chains.

For Expert Support and Collaboration

For expert support in the energy sector, electric vehicles, or battery markets, contact NRI America at takeo.fujimoto@nria.com or call 631-943-7576. With a relentless focus on driving innovation and operational excellence for multinational companies in clean energy technology, our consultants can guide you in exploring inquiries or collaboration opportunities that contribute to shaping a cleaner and more sustainable energy future.