Circular economy in battery disposal

The increase to 70 million electric vehicles by 2030 leads to the question of what the end of the batteries will be used once they can no longer generate power and ensure the proper range. Like a smartphone, after a series of cycles, the

2.3. Electricity in the future cars Chapter 2. Future scenario and market trend battery can’t handle the necessary voltages, and therefore the phone shuts down.

Imagine the enormous damage this phenomenon could generate in a car during an overtaking manoeuvre. It has been shown that when battery capacity drops below about 80% of nominal capacity, the performance to power the vehicle is no longer guaranteed. Currently, according to an analysis by telematics service provider Geotab, the average useful life of lithium-ion batteries in electric cars on the road today is about 10 years. In the future, this range should be extended beyond 20 years, with more than 450,000 kilometres driven. In addition, the rare materials used in the production will be replaced by other less expensive and more abundant such as sulphur, increasing revenues and margins of recycling.

According to a study conducted by BCG [9], recycling EV batteries will be the most likely choice because generating profits from reuse ("second life" applications) will be much more difficult. This growing market will be worth an estimated 10 billion dollars in 2030. In 2020, more than 32 million EV were in use globally. Of these, 8 million are either all-electric passenger vehicles (BEV) or hybrids (PHEV, HEV and Mild Hybrid Electric Vehicle (MHEV)). To date, more than 1 million of these cars will need a battery change, while by 2030, there will be more than 4 million, and this trend will continue to grow in parallel with EV registrations.

At the end of its life cycle, i.e. when it falls below 80% of its rated capacity, a battery can take three possible destinations:

• a recycling plants

• a second life application

• a waste disposal plants

Below, the first two solutions will be analysed. In the third case, the batteries are stored in a landfill without recovery of the residual value of the batteries.

Governments are creating new regulations to prevent batteries with the remaining value from ending their lives in waste disposal facilities.

Recycling

With recycling, a specialised company recovers precious metals from the battery, including cobalt, manganese, nickel, and lithium. It then sells these materials to use them again as raw material in producing the same batteries. The emerging market for lithium car batteries will need to model itself on lead-acid batteries, proven recycling that has been successful, and not use the current logic in consumer electronics that batteries end up in landfills or incinerators.

2.3. Electricity in the future cars Chapter 2. Future scenario and market trend Chemistry is the most interesting thing in the business. Within batteries, the value of nickel, in particular, will determine the industry’s attractiveness as batteries with higher nickel content grow. On the other hand, recyclers’ operating costs are relatively fixed for all chemistry types. The recycling process is divided into three steps

• deactivation of cells to avoid fires

• pre-treatment to deconstruct the main components of the cell (aluminium, plastic, and cathode)

• material recovery

The cost of acquiring batteries for recycling varies significantly by region. In China, where the recycling market is mature and full of players, acquisition costs can be high due to intense competition, up to 50% of the total expected recovered value. On the other hand, in the U.S. and Europe, acquisition costs are virtually zero because the market is embryonic, and players operate at a low scale. For the latter, an investment in a plant capable of disposing of batteries of different sizes and scales would be worthwhile. This would generate greater yield and scale but would increase their investment costs. In addition, disposal technologies evolve quickly, making previous technologies obsolete. This could benefit new market entrants. Established companies will have to cope with the fluctuating cost of energy and metals and meet stringent environmental demands by investing additional capital.

This market looks very promising. Emissions from recycling materials are sig-nificantly lower than from mining. This is just one indicator that values this process for a less polluting future. Battery recyclers won’t be the only ones to benefit. Other players could profit from this business. For example, OEMs, cell pack manufacturers, and component suppliers could develop a strategy that leads to a long-term competitive advantage just through recycling.

The main bet for this market will be to invest in technologies that maximise metal recovery and resource efficiency. Digitisation will be the real player in this process in the future. Thanks to incentives, in Europe, starting a business now could be risky but profitable. OEMs, as well as more robust suppliers, will be able to invest in new recycling facilities. This would reduce the high transportation costs for battery packs, given their weight, shape and risk during transport.

2.3. Electricity in the future cars Chapter 2. Future scenario and market trend A second life for EV batteries

Unlike recycling, this solution repurposes battery cells for new use without dis-mantling them. Taking a real-world example, a 60-kWh battery pack in a BEV , after dropping below 80% of rated capacity, is still capable of producing 18 MWh of electrical load in static form, e.g. powering an entire house for more than ten years. Stationary Energy Storage (SES) applications are the most promising second life solution. These give the ability to store energy generated from a variable renewable source (such as, for example, wind or solar power) for use at a later date. The main problem is that the cost of batteries in mature markets is remarkably increasing, so it is no longer a profitable solution.

Batteries could in the future be adapted before being used as SES . As they are not exposed to a dynamic and unprotected environment, the bark of the batteries could be reduced by decreasing the footprint. The entire storage facility will need to provide the proper security, but each battery could be separated from its casing. This solution is very beneficial to the environment. If the carbon footprint is present (although to a reduced extent compared to extraction), there are no emissions by exploiting the concept of second life. This minimises the amount of CO₂ generated to produce the battery throughout its life cycle.

OEMs can benefit significantly from this solution. After 2030, the largest OEMs will have access to a high number of batteries for replacement. With these, they will create SES plants to power factories or use their technical knowledge to integrate them into a new vehicle. Importantly, OEMs also have access to historical battery management data to study them more closely and understand their evolution over the years. Having access to the history of previous battery use is a critical input in calculating the residual battery value to be leveraged. SES companies, on the other hand, could create new customer-friendly formulas. For example, they could secure a large battery to be leveraged by offering a battery rental agreement.

An alternative to the second battery route could be the Vehicle-to-Grid (V2G) solution, i.e. mobile vehicles capable of storing energy and releasing it when needed. Many modern cars possess this technology, such as the Kia EV6. In the future, when the number of V2G vehicles is higher, this technology may replace SES, a threat to the business of this market.

Most likely, due to the logistical issues associated with battery storage and residual value recognition, this technology will not be the most widely used. It’s possible to assume a 20% reuse rate of batteries recycling of materials to create new batteries will be favoured.