While most people are still figuring out what happens to battery once it runs out of charge, OEMs have started supporting programs that aim at recycling battery and its cells.
From 2005 onwards, the total electric vehicle sales have surged from 1.89K to 1148.70K. By 2040, one third of the global vehicle fleet is expected to be electric. Batteries will be the main source of power; and considering a life cycle of 10 years for passenger cars and 5 to 8 years for buses and trucks, the old batteries need to be replaced by the new ones. So, what will happen to those old batteries and where will the new batteries come from?
People generally fail to realize that manufacturing of an electric vehicle generates more carbon as compared to conventional vehicles. At the front end of the manufacturing process for electric vehicles, a considerable amount of greenhouse gases is emitted. For instance, new batteries will need new material to be dug out from the mines, which will further impact the environment. In addition, old batteries are disposed of as toxic waste in landfills, further damaging the environment. There is a need for governments to pass stringent regulations governing the recycling of lithium-ion batteries. China has passed on the recycling responsibility to electric vehicle manufacturers. Automo expects that the European Union will also pass certain regulations regarding electric vehicle battery recycling.
According to Automo analysis, the electric vehicle makers have two options for battery recycling. The first one is to identify a new home for the batteries where they can serve the remaining 5 to 10 years of life. The second option is to donate the operational parts after its first life cycle. In both cases, lithium-ion batteries will attain immortality. The batteries will generate recurring income from both the models, making it a part of a circular economy.
In their second life, the batteries can be employed as energy storage devices for homes. They can also be used to store solar or wind energy. In addition, for smart users, the EV batteries can be used to store electric energy when the grid rates are low. This will further provide them with energy during peak hours. If the different modules are combined, it can also be used in the larger applications such as a microgrid. This is one of the safest and most convincing options.
According to Tesla Inc., its batteries will not satisfy the needs of other applications. The company is planning to recover the raw materials such as cobalt and others from the old batteries. In future, anyone model will be successful and if Tesla’s model is more profitable than the repurpose model will be discontinued and the players will buy back the old batteries from the consumer to extract the raw material and develop a new battery. In future, if Tesla’s extraction model is more profitable than the repurpose model, it will be soon discontinued and the key players will focus only on extraction model. So, if the lithium-ion batteries are not reused, it will be a huge waste and will also have a detrimental effect on the environment.
Cobalt and Lithium Demand, Global, 2017–2030
Over the past two years, these two commodities have witnessed a sizeable change. This change reflects the major demand for the materials in EV batteries. According to IEA, in both scenarios, that is, low cobalt and high cobalt, the demand from electric mobility will rise. In the future, the chemistry of the cobalt will increase its variability, that is, from low cobalt chemistry to high cobalt chemistry.
Cobalt can be extracted from lithium-ion batteries with 100% efficiency. Thus, the question remains: =why can’t we use smartphone and laptop used batteries to extract cobalt for new batteries. Every year, billions of smartphones are added to the market. In addition, people already owning a smartphone have at least one phone in their drawers. The smartphone batteries comprise approximately 20% cobalt, and Chinese recyclers employ that cobalt to manufacture cathode material for new batteries. Majority of used phones travel to Shenzen, China from Hong Kong. In the recycling plant in China, the phones are refurbished and graded. The operational spare parts of the used phones are extracted for new batteries and a few of them are sold in the domestic component market. The phones with heavy wear and tear go to the African and South Asian countries. This further reduces the price of cobalt and the final battery. IndustryARC is bullish about the battery recycling market of China, South Korea, and Japan and bearish about the European and North American markets. The governments in Europe and North America should also pass stringent regulations on battery recycling
At present, cobalt has witnessed falling prices, further weakening the Chinese domestic market. Cobalt is trading at $41.65-42.95 per lb, and the further drop in prices is expected because China is planning to terminate the subsidies on low-range electric vehicles. This has further forced the sellers to offload their stock in the form of metal to overseas customers. The overseas customers are delaying the purchase with an expectation to avail the metal at a much-discounted price. This drop in prices and the availability of used smartphones will further trigger the recycling market. A kilogram of mobile phone battery is priced at approximately $15 to $16. Reuse companies merely pay $4/Kg. If this deal yields 25% good batteries, the three-quarters of the battery will further generate $10/kg and it is a fairly good deal. We, at IndustryARC, are super bullish about the lithium-ion recycling market.
IndustryARC expects that the first batch of lithium-ion batteries will attain immortality. It will belong to an economy called a circular economy where the batteries will be employed for the electric vehicles in the first stage and consequently for energy storage in some other applications. This will further reduce the environmental impact and the prices will fluctuate slightly above or below the normal level based on demands.