This is Dana Perkins and you're listening to Switched on the B and EF podcast. So, electric vehicle sales are growing all over the world, and while electric vehicles cut tailpipe emissions, there is a further opportunity to reduce the emissions associated with the embodied carbon found in the creation of the batteries themselves. So that leads us to the three point seven million metric tons of end of life batteries that could become available for recycling in twenty thirty five.
That's enough to supply ten to eighteen percent of the key metals used for battery manufacturing. But just how well established are the existing battery recycling facilities and the policies that incentivize the recycling to actually take place. And how can we ensure that the recycling of components becomes an essential part of battery manufacturing, especially considering it has the potential to dramatically reduce the emissions associated with the batteries themselves.
So to tell us more about battery recycling, I'm joined by Andy Leach. He's an associate from BNAFS Energy Storage Team. Andy reveals some of his key findings from a recent report titled Lithium ion Battery Recycling Market Outlook twenty twenty four, and he talks about the evolution of battery chemistries which will impact the longer term availability of metals and how they can be reclaimed in the recycling process, and why production scrap is actually one of the most important feedstocks
for this space at the moment. To access this report, b and EF subscribers can find it on benf dot com or at BNOF on the Bloomberg terminal. Subscribe to the show for updates, or give us a review to share us with others. But right now, let's jump into our conversation with Andy. Andy, thank you for joining us on Switched on again today.
Thank you very much for having me, Diana.
We are here to talk about battery recycling, and, as I like to do at the beginning of pretty much every show these days, where we're getting into a technical process, explain what battery recycling is and how it's done.
Sure, so, battery recycling is taking batteries which have been in electric vehicles and quid scale energy storage projects. These batteries can be dismantled, and they can be dismantled in a couple of different ways. So they can be taken apart and tested potentially for a second life, or they can be shredded before this point, or if they don't have any sort of use as a second life, they can be shredded after this point. Then the material that produced from this is called black mass. So this is
a mixture of all different materials. This has lithium, nickel, cobalt depending on the battery chemistry, as well as other things like aluminium and copper. And then this black mass is processed in similar ways that sort of primary or virgin material will be processed to become the commodity salts or maybe even precursor materials to make new batteries.
We're going to spend most of our time talking about the recycling end of things, but when you talk about second life, I want to know how much of the market is actually reused before it becomes recycling. When we're talking about vehicles specifically.
So the second life market is much smaller because if a battery has had a full first life, the chances of its having sort of usable value and usable capacity for a second life is smaller. However, there are some exceptions to this, and one of those exceptions can be if a car company recalls some cars early because of a fault to do with battery packs, but maybe some of the cells in the battery packs are still good, this can mean that these percentages can be a bit higher.
A notable example would be a couple of years ago GM recalling some of the Chevy Bolts. Some of these cars were recalled after any one or two years on the road. Now it's very likely that a lot of those cells will still have usable life in them. But yeah, it's not unheard or for car batteries to come back and go back into cars, but also going into energy storage projects as a very very sort of viable second life for sure.
One of the reasons that battery recycling is so exciting is that it really reduces the emissions of those vehicles that actually have a recycled battery in it. There are so few things in the world that I think wouldn't benefit from recycling in terms of emissions. When you actually think about getting virgin materials out of the ground the muddles versus taking something that is already extracted and then
converting it into something else. So when we think about how much of this is actually going to be happening in the future and potentially a decline in electric vehicle emissions overall. When we think of imbodied emissions in their second life, how big is the market going to be from battery recycling, Like how many batteries are going to be coming in? You know what do we see coming down the pipe?
So for sure, if you're recycling a battery, the emissions associated with this are likely to be lower. So for a very obvious example is supply chain length. Right, So virgin materials and mines, they are where they are and we can't move them too much. If there's a lot of one material in one place, then you need to ship this around the world to get it to where
it needs to be. Now, if you're producing an electric vehicle in Europe or North America and you can recycle batteries from those vehicles at their end of life in those regions, you can significantly reduce the supply chain and the sort of logistics there, which has an emissions benefit.
Now you also have a benefit that you don't need to be digging this stuff out to the ground and moving a battery from an electric vehicle and shredding it has a lower CO two footprint than digging this out the ground and moving it around continents, and some some battery metals move around the world significant distances before getting into batteries.
Can you give us an idea of the volume batteries that are actually going to be recycled in the future and essentially how many vehicles are, how big we see the electric vehicle space growing to in the near and medium term.
Yeah, in the analysis that we did in this most recent report, we see approximately seven hundred and sixty seven gig or towers of battery materials available to recycle by twenty thirty five. Now in the report, we dig down and we compare this to the ratio of new demand
for these materials. It varies by metals. So between lithium, nickel, and cobalt, the ones that we dug into, nickel and cobalt can be getting up towards eighteen percent of supply of these metals can be produced by recycling used batteries, and with lithium it's a little lower due to the different chemistries of different batteries that are used, and this is more around just below ten percent eight nine percent.
And different battery chemistries are used for different purposes. What impact does the way the battery is used have on its life cycle and how often they will end up being recycled or does it really come down to the battery chemistry and what it is that the battery is made of before it then makes its eventual way to being recycled.
Yeah, so there's two key factors as to how long it will take battery from going into use to coming to its end of life. So it's the use case, so how much you're using it, how many times you're charging and discharging it, And then it's the battery chemistry.
For example, we would expect batteries in ebuses and commercial vehicles where these vehicles are maybe being used every single day, multiple times a day, to come to their end of life sooner than maybe in a passenger car where someone may use the car maybe only once a day, or maybe even less than once a day. The lifetime would
be much longer. Here within the battery chemistries, the two sort of main groups of battery chemistries within litiumine batteries are going into cars and stationary storage projects LFP batteries Lithium I and phosphate batteries. These batteries don't contain any nickel and cobalt and therefore a slightly cheaper and they have a lower energy density, so their range in vehicles will be lower and compared to the nickel based chemistries,
but they have a longer life cycle. They can have life cycles of six or eight thousand cycles or maybe even more. And if you're cycling your battery once a day, six or eight thousand cycles is getting close to twenty years.
So maybe other factors come in there as well. And then so the nickel and cobalt based batteries they can be cycled maybe two to three thousand times, maybe slightly more for some high performance batteries, so this is about half that of the LFP or lithium im phosphate batteries. So the nmcs and the ncas using sort of higher range, higher performance cars, and so these batteries have a slightly
shorter life cycle. And then again if you're using them in an application, maybe in a truck or a bus where you're driving around constantly all day every day, this can shorten it. So we have a few different assumptions in our analysis. Trucks and buses have some of the shortest assumed lifetimes around six to eight years.
The companies that are taking this black mass though, and turning it into these new sets of batteries, are they the same companies that are actually manufactured the initial batteries or are they completely different companies that specialize in recycling.
So there's a range. There really is a range. There's some companies that will take batteries, maybe test them as I said, or maybe just shred them straight away and produce black mass and that's the whole business. There's some companies that will take that black mass, process it into commodity metals or maybe precursor materials for other people to make the specialist chemicals. And then there's some companies that
take this whole supply chain. They take batteries, they shred them, they turn them into the precursor materials, and then they produce cathod at the end, which they can sell to somebody making batteries. So there's a range of different business models. Some parts of the supply chain, or some parts of
this processor may be more technical than others. Just shredding batteries is potentially maybe easier than producing cathode material, which maybe needs to go through qualification processes with battery manufacturers and OEMs at the end of this as well.
So when we think about the parts of the world where this is really taking off, I'm thinking about the fact that electric vehicles have actually had higher rates of adoption in some regions over others. The US, it's started to get traction, But really China has been one of
the earliest adapters of electric vehicles at scale. And what I want to know is then on the recycling end of things, as the batteries have started to get to the end of their useful life, is China then also leading the way in terms of battery recycling or is it other parts of the world that have decided to look at this as an opportunity and perhaps those batteries are being shipped to them.
No, you're completely right. China is leading the way that their policy is leading and mandating things which Europe have been catching up with. As you mentioned, they also had much larger electric vehicle update sooner than Europe and North America, the three key regions that we looked at in this analysis. So yeah, the volumes in China are higher both on new batteries being made but also batteries coming to their end of life. The capacity for recycling batteries is larger in China as well.
When I think about the companies that are actually looking to recycle these batteries, there are two things that they're more than likely thinking about, which is how easy is it going to be to get all of that important battery metal and then turn it into something else? And then also how expensive is it as a virgin material? So can you just talk a little bit about what are the metals a in a battery? But be that these recyclers are most keen to get their hands on in this process.
So the metals that there's three key metals that are most most sought after by the recycling companies, and that is lithium, cobolt, and nickel. It's due to what you're mentioning here the cost of these materials. They are key drivers into battery prices. And lithium, for example, recently, we saw very high prices a year or two ago and this has come down a bit. So this is not a great sign of your producing this material. But nickel and cobalt that prices are, yeah, they're still some of
the more expensive materials going into batteries. And these are the three key things that There are other metals in batteries, as I mentioned earlier, there's copper, there's aluminium, there's iron as well, but the ones that most battery recycling companies are focusing on are lithium, cobolt, and nickel. And how much of the new demand that the recycled material can
supply is very much due to changing battery chemistries. So we've seen recently LFP, lithium I and phosphate which doesn't contain nickel and cobalt become more popular, starting in China but also around the rest of the world. And this is meant that more nickel and cobalt supply can be met with recycled material relative to lithium because apart from sodium ion, which is a small and grown segment of the market, all of the batteries contain lithium that we're
talking about here for electric vehicles and good scale projects. Therefore, this is very much a very key focus for recycling companies.
So let's talk a little bit about the economics and battery recycling, because the companies need to be incentivized either by being able to make the batteries more cheaply or policy incentives So in this circumstance, what is it. Is it policy or is it economics that are driving these companies to really grow in this market.
I think it depends in which region that we're looking at. In China, for example, there has been policy since twenty eighteen and there are mandates around collecting batteries at their end of life and once you collect that battery, how much of them materials inside that you recover when you recycle it. And this is very much driving the industry in China, and as I said, there is a lot of capacity there, but there's also a lot of material
to recycle. Europe has a similar approach. Unfortunately, the incentives are coming slightly later, although because the electric vehicle market took off slightly later, and maybe this lines up quite well here. But yeah, starting in twenty twenty seven and twenty twenty eight, there are collection efficiency targets and recovery rate targets for sort of collecting the batteries at the end of life when they've been in a vehicle and
then recycling those materials and getting them back out. In the US, which is the third region that we looked into, there are some benefits via the inflation Reduction Act for recycling material although not as significant as the benefits offered to producing new batteries and battery packs in the region.
So, Andy, how does that actually work in practice? What part of the battery value chain does the policy target?
So this is a really good question because the answer isn't straightforward. We don't really know at the minute, particularly with the policy in the EU. I've had a lot of questions from people that I've been working with and clients well around is it going to be on the battery manufacturer to do this? Is it going to be on the car company to do this? The E policy isn't clear on this, and we need to wait for policy to come. It's likely that it will be related
to the car company. It makes more sense because they're closer to the consumer. However, they need to get the vehicle back from the customers who then own it, so the process here is not straightforward.
I know they're using blockchain for some of the virgin materials that are being mined. Are they using any sort of solutions like that to actually track these batteries to make sure that they're getting them back and they are being recycled.
So, again, this is a regional question. I'll start with the US because it's straightforward that they're not doing it. No. In China, there are requirements to trace and report batteries through the sort of manufacture, through their lifetime and seeing where they end up at their end of life. And then this is something that the EU is planning to do but isn't enforced yet. So in twenty twenty six this will be required in the EU as.
Well in every market. For it to be viable on its own, from an economic standpoint, you need a bit of a supply and demand balance, and in this industry there is a bit of an imbalance when we think about the number of recycling facilities, in particular in China that are scheduled to be built, and with the forecast that you've done when looking at this report, are there going to be enough batteries to be recycled in order to meet this demand? And why or why not?
There is a bit of an imbalance here. The material available to recycle from ESS and EV batteries is significantly lower than the capacity that's being built, particularly in the Asia Pacific region which is largely dominated by China. But also that there is capacity being built in Europe and North America. One of the reactions to this that we've seen is companies who have recycling facilities also looking to
process primary material as well. Because some of the processes are quite similar, it's possible to process both primary and recycled material in some of the same facilities and some companies.
So so if you're a company going as far as making precursor materials to make cathodes from, for example, and your recycling material which was maybe NMC sixty two to two, which was very popular a few years back, so six to two being the ratio of the metals, so sixty percent nickel, twenty percent cobalt, twenty percent manganese in the cathode there and customers now want NMC eight one to one, so eighty percent nickel, ten percent manganese, ten percent cobalt.
The recycling companies are actually using primary material to add nickel to this ratio to make sure that they can give the customers what they want. So even in some inverted commas ideal scenarios, primary material is being added to the recycling mix. But that's also not to say that if there is too much capacity in the recycling world that some of this couldn't be used to process primary material as well.
And also, what's the degree of overlap with consumer electronics which also rely on batteries.
This is a really good question. So consumer electronics batteries are potentially harder to collect because there are many smaller batteries, but companies are also looking to process these as well. The analysis that we did in this report focuses on electric vehicle and energy storage projects, so that's not to say that consumer electronics batteries could also end up in the mix. However, there are lots of smaller batteries which
are spread out more in the world. As it were, collecting one phone will give you a significantly smaller battery to recycle than collecting one car or even one grid scale energy storage project. And also the demand of electric vehicles and energy storage projects in the future will be significantly higher in the near term and then maybe in
the near future. The consumer electronics market was a bigger percentage of global demand of batteries, but that's likely to be dwarfed in the very near future.
So no manufacturing process is fully zero waste. I'm even thinking of right now in my mind, like when you're baking a apple pie, and you've got all of this kind of extra dough around the edge, and then you know, if you're my grandmother, you're going to turn it into something else and you're going to cover it with cinnamon sugar. But the reality is there's going to be some leftover materials and metals when it comes to battery manufacturing and
then the process that goes into it. What happens to all of that leftover stuff, which I believe is referred to as reduction scrap.
This is a really great question, and you're right. We refer to it in the research as production scrap, and this is just sort of one segment that we refer to. But actually within this there's loads of different things that this can mean. This can mean powders that sort of, as you say, maybe they don't make it into the apple pie as it were. This can be slurries that get left behind on equipment as well. This can be
cathos which are then coated. But the offcuts of this, This can be batteries that get fully made but they don't pass the quality controls. So this can come in a number of different flavors, and in the near term we expect this to be a very significant share. I think in twenty twenty four, eighty percent of material available to a cycle is to come under this umbrella of production scrap due to the very rapid growth that we've seen over the past few years of battery demand, and
that the longer lifetimes that we're seeing. The last time we did this analysis, the average lifetime of batteries was about two years less when you extend the lifetime of batteries in use, and then you have to go back another couple of years on that demand curve. So in twenty twenty four, if you're saying a ten year lifetime for a passenger EV, you're going back to twenty fourteen, and there weren't a lot of passenger evs on the
road in twenty fourteen. Now, if you compare that to production scrap for new material, and in this work we assumed a ten percent rate of scrap coming off factories, this goes down to lower percentages, and we sort of split that out by regions, So regions like China where there's a more mature battery manufacturing industry getting down to lower percentages sooner. But even with a scrap rate of
ten percent, which tapers off. Eighty percent of current material available to recycle is material that never made it into a functioning battery in the first place.
So when we're talking about a potential supply and demand imbalance in the future when it comes to battery recycling, we need to be thinking more broadly about more than just the batteries that are at the end of life, but also think about this production scrap to think about
the whole potential for some of these facilities. As we think about the future and we think about the uptake for electric vehicles, there will be more demand for recycled batteries, and there's going to be more demand for batteries that are made from raw materials. Is there any concer on the part of a battery manufacturer, is that the recycling side of things is going to cannibalize some of their business or is this just so much growth in the future that nobody's kind of looking at each other.
I think at the moment, the demand is growing so rapidly that I think we need supply from all different directions, and ultimately, if we're going to get a sustainable future and a greener future, we need to rely more on recycling things. Than digging things out of the ground. Now that's not to say that we don't need to continue digging things out to the ground and being better at
doing that in a greener way. But in the near term, I mean, in this report, for example, I think eighteen percent of nickel and cobalt can be supplied from recycled material by twenty thirty five. That still means that we need eighty two percent of the nickel and cobalt demand to be coming from minds.
So, Andy, last question. We had a great time in this show today really getting a lay of the land on what's actually happening in battery recycling. But I know that you're going to take a closer, deeper look on a number of different topics. What's coming up for you in digging deeper in battery recycling.
So this this piece of research looks at the market size and the available material to recycle, as well as some of the policy driving this in New York, China, in the US. Coming up, we'll do a deeper dive on some companies and the different technologies to recycle. Main
technologies being pyrometallurgy and hydrometallurgy. Similar to processing primary material However, there are other processes, electrochemical methods and more innovative methods and more niche methods for processing material as well, which we'll dig into and highlight some of the companies doing this work.
Okay, well, we can find out more about the companies that are taking a closer look. Andy, thank you so much for joining today.
Thank you very much for having me.
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