1 topic, 2 key figures, 3 startups to draw inspiration from
According to the International Energy Agency (IEA), the global fleet of electric vehicles (excluding two/three-wheelers) will reach 245 million vehicles in 2030 – more than 30 times the current level. But while the electric mobility revolution is underway, batteries present several challenges. EV batteries only last about 10 years and the main raw materials used in them are becoming increasingly scarce. In addition, the prices of raw metals are rising and volatile: the price of lithium in 2018 was 241% higher than in 2010, before falling in 2019. Thus, the two major consequences of this EV boom are the increase in demand for lithium, cobalt, and nickel (the key raw materials to produce battery cells) and the challenge of managing lithium-ion battery waste. Players like startup Redwood Materials, cofounded in 2017 by former Tesla CTO J.B. Straubel, are positioning themselves to address battery recycling issues. Indeed, in February 2021, Redwood Materials signed an agreement to recycle scrap and defective battery cells for Envision AESC, the Nissan car battery manufacturer in Smyrna, USA.
When an EV battery reaches the end of its first useful life, manufacturers can either dispose of it, reuse it, or recycle the valuable metals. To reuse batteries, several European automotive companies have already begun installing old EV batteries in multiple energy storage systems, ranging from small-scale residential systems to large-and grid-scale solutions. Nissan, for example, is the first carmaker to have received certification for second-life LEAF batteries to be used in stationary energy storage. Car retrofit – i.e. replacing a thermal engine with a recycled LIB or H2 battery to reduce its emissions (see our newsletter #28) – is also gaining ground. In 2019, Audi announced that it had begun testing second-life EV batteries for factory vehicles.
The other recycling solution is to separately recover the materials from the LIB to give them a second life. As resources are limited, LIB recycling seems to be essential for electric vehicles’ success. The economic benefits of battery recycling are very promising. Based on a recycling rate of 80% after 10 years of use, the profit from the battery recycling market could amount from €0.7 Bn to €1.4 Bn in 2030 (Roland Berger study).
Recycling processes generally involve a physical/mechanical separation followed by pyrolysis and/or a hydrometallurgical process.
- The pyrometallurgical process: nickel, cobalt, and copper are recovered through smelting. Despite the large energy inputs, the recovery rate of this process is low, around 30-40%.
- The hydrometallurgical process: the metal component and the recycled metal solutions are dissolved by leaching. The recovery rate of this process is higher and less-energy intensive, thus preferred by market players. For instance, the German startup Duesenfeld has built a recovery method that combines mechanical, thermodynamic, and hydrometallurgical processes. Compared to the pyrometallurgical process, their method saves 4.8 tonnes of CO2 per tonne of recycled batteries.
Both technologies are used by more and more players. Not only the traditional recycling players but also automotive companies and new startups.
Veolia has been recycling car batteries in France since 2013 and decided in September 2020 to join forces with Solvay to create a circular economy consortium to optimize the recycling of LIB for EVs and hybrids. Regarding automotive players, Audi and recycling player Umicore announced a battery recycling partnership in 2019. For this closed-loop pilot project, Umicore will recover cobalt and nickel from Audi’s e-trons (more than 90% of the cobalt and nickel in their batteries can be recycled) and process them into precursor and cathode materials to produce new batteries from recycled elements. Similarly, Singaporean startup Green Li-ion has a patented multi-cathode processor to recycle all types of Li-ion batteries into 99.9% pure cathodes. This is expected to speed up current recycling processes tenfold and increase profits fourfold.
As this recycling potential begins to be exploited by many players, legislators are supporting these trends through regulations and directives. The EU Commission, whose new Battery Directive is due to be transposed into national law by 2024, wants car and battery manufacturers to set up a comprehensive battery collection and recycling system. The stated aim is that about half the weight of lithium-ion batteries (LIB) should be recycled. In Canada, the Ontario government drafted regulations in May 2019, making the battery producer liable for the collection and management of their product to help create a circular economy. In China, the government has implemented a Battery Recycling and Traceability Management Platform in 2018, where all EV batteries are assigned a unique and traceable ID, facilitating the collection, sorting, and recycling of e-waste.
Although the regulation is being implemented, four major challenges remain:
- The inadequacy of the logistics of LIB collection channels. While this issue should gradually be resolved as recycling accelerates, the question of who will take on the role of logisticians (battery manufacturers, automotive brands, or recycling players, etc.) will remain uncertain if recycling remains centralized.
- The high upfront expenditure required to set up a large-scale LIB recycling plant. Economies of scale are likely to be seen within 5-6 years as recycling becomes more widespread and systematic.
- The requirement for a high LIB recycling efficiency rate, regardless of the LIB chemistry being recycled. The recycling rate is already around 80% and is expected to increase in the coming years, as some startups are developing prototypes capable of recycling more than 90% of the LIB.
- The recycling steps vary according to the different types of batteries (lead-acid, nickel-cadmium, zinc-air, alkaline, …). Thus, recycling facilities need to be adapted to several processes. Even among LIB batteries, the most used for EVs, the process differs according to their composition and recovery rate.
To conclude, lithium-ion batteries are likely to remain the major battery type for EVs in the coming decades (due to their high energy intensity relative to their weight, compared to other batteries such as lead-acid, nickel-cadmium, or zinc-air). There is a need to close the loop to meet the demand for their scarce and expensive raw materials.
2 Key Figures
51 battery recycling startups
registered by Traxcn
Market size expected to reach $12.2Bn by 2025
The size of the battery recycling market is expected to reach $12.2 Bn by 2025, compared to a market of $1.5 Bn in 2019.
3 startups to draw inspiration from
This week, we identified three startups that we can draw inspiration from: Li-Cycle, Green Li-ion and Lohum.
Li-Cycle is a Canadian startup that uses a combination of mechanical size reduction and hydro-metallurgical resource recovery techniques to recycle lithium-ion batteries. Their recycling technique does not generate any hazardous product which minimizes transportation liability and lowers costs.
It is a Singapore-based start-up which recycles the metals of LIBs (cobalt, nickel, manganese and other expensive metals), recover them, and make them ready to be reused in new batteries. Their patented technology is cleaner, faster, and four times more profitable than current LIB recycling. It is also the only technology to fully rejuvenate the battery cathode
Lohum is an Indian start-up manufacturing of Li-ion battery packs and recycling battery components. It provides full lifecycle solutions for manufacturers involved with low-power mobility and storage applications such as electric two-wheelers, rickshaws and inverters. It offers secondary life cycle solutions such as battery recycling to large manufacturers and companies using Li-ion batteries.