BloombergNEF estimates that EV sales will reach 100 million by 2026 and 700 million by 2040. This means that we can expect a surge in car lithium battery recycling because they contain valuable materials like lithium, cobalt, and nickel that can be recovered and reused.

According to estimates, the lithium-ion battery recycling market is expected to reach $35.1 billion by 2031. 

At present, Redwood Materials and Li-Cycle are some companies that are spearheading the development of advanced recycling techniques, such as hydrometallurgical processes. These techniques for recycling lithium-ion batteries can recover up to 95% of these precious metals. Recycling can help reduce the demand for new mines and lowering the level of CO2 emissions, thus contributing to the sustainable development of the automotive industry.

Let’s explore this in more detail.

The Rising Tide of Lithium-Ion Battery Disposal and the Economy

Around 250,000 tons of lithium-ion batteries were disposed of in 2020, which is expected to double by 2025. This presents both an environmental challenge and a lucrative economic opportunity. Recycling these batteries conserves valuable natural resources and offers substantial financial rewards. 

Now, let’s delve into the economic implications of lithium-ion battery recycling:

Profitable Resource Extraction

Due to steadily rising market prices, the extraction of valuable materials, such as lithium, cobalt, and nickel, from used batteries has become an economic priority. 

For instance, the price of cobalt on the London Metal Exchange is $28,423 per tonne, and in China, the price of lithium carbonate has reached record levels: $15,202 per tonne.

Lithium-ion EV batteries, which are used to improve the energy density of the battery and ensure stability, may contain up to 15 kilograms cobalt, 40 kilograms of nickel and 50 kilograms of lithium. 

Manufacturers like Tesla and Volkswagen are striving to improve the battery chemistries in the best way to improve the efficiency while at the same time reducing the cost. 

Some companies are also trying to optimize the ratios of nickel and manganese in cathodes, while others are working on cobalt-free batteries with LFP batteries in mind. 

The Rapid Expansion of the EV Market

As noted above, the market for EVs is expanding rapidly worldwide. This boom implies that more batteries will soon require recycling, requiring the development of efficient systems. 

Currently, only 5% of lithium-ion batteries are recycled in major markets such as the U. S., EU, and Australia. 

Increasing this rate could greatly increase the amount of materials recovered and decrease the demand for new mines which are expensive and harmful to the environment.

To note, a study by Circular Energy Storage reveals that the lithium-ion battery recycling industry is becoming more robust than previously thought. Their research indicates that in 2018, an impressive 97,000 tons of lithium-ion batteries were recycled globally, with China and South Korea leading the charge at 67,000 and 18,000 tons, respectively.

Cost-Effective Manufacturing Through Recycling

Recycling can reduce the cost of manufacturing new batteries. A recycled battery is approximately 1,200 €/kWh against 132 €/kWh for new ones. This cost-saving could make EVs more affordable and encourage more people to switch to electric, which would further benefit the environment.

Different Business Models for Lithium Battery Recycling  

The surging demand for EVs is driving a critical need for sustainable lithium-ion battery (LIB) recycling strategies. To address this challenge, two distinct models have emerged as frontrunners:

• Centralized facilities offer the advantage of scale and greater technological sophistication yet must contend with the high cost of transporting batteries from remote locations and the complicated logistics of managing them. 
• Decentralized facilities are located near sources of battery waste and are cost and logistically efficient. However, there is a risk that they might not be able to compete with the technological capabilities and affordability of the centralized ones.

Relationships between Car Manufacturers and Recycling Firms

Automobile producers partnering with battery recycling industries ensure a closed-loop system, efficiently reclaiming materials from used batteries, reducing waste, and minimising resource extraction, fostering a sustainable lithium-ion battery ecosystem.

An example is the collaboration between General Motors and Li-Cycle, a recycling company that is working to increase the recyclability of EV batteries in North America. Ajay Kochhar, Li-Cycle’s CEO, notes: 

“Our combined efforts with Ultium Cells will be instrumental in redirecting battery manufacturing scrap from landfills and returning a substantial amount of valuable battery-grade materials back into the battery supply chain.” 

Why Startups and Innovation Hubs are Important

Investors are also considering startups and innovation hubs as key facilitators for improving the economic efficiency of LIB recycling. 

For example: 

• A former Tesla executive has established Redwood Materials and is focusing on resolving the challenges associated with the recycling process by supporting efforts on the development of new recycling technologies that optimise the material recovery process and reduce cost. 
• India’s Ministry of Electronics and Information Technology (MeitY) has transferred a cost-effective lithium-ion battery recycling technology to nine recycling industries and start-ups. This indigenously developed technology can process various types of discarded Li-ion batteries, recovering over 95% of valuable metals such as lithium, cobalt, manganese, and nickel with about 98% purity. 

These platforms bring industry, academia, and the government together to help streamline the development of recycling solutions that can be scaled and made economically viable. 

Tesla’s Paradigm Shift: Chaining Battery Recycling in the Supply Chain

Tesla’s Gigafactory in Nevada is pivotal in its battery recycling paradigm. The facility integrates closed-loop processes to reclaim valuable materials like lithium, cobalt, and nickel from used batteries. 

Tesla’s commitment to a circular economy is demonstrated by its goal to recycle 92% of battery materials, reducing waste and dependence on raw material extraction. This approach not only lowers production costs but also enhances supply chain sustainability.

Driving Economic Growth Through Sustainable Lithium Battery Recycling

Lithium battery recovery is crucial for economic and environmental sustainability. With the surge in electric vehicle (EV) adoption, recycling bolsters the economy by reducing reliance on newly mined lithium and cobalt, potentially decreasing these needs by 25% and 35% respectively. 

This reduction lowers production costs, creates new job opportunities, and stimulates technological advancements, all while minimising environmental impact.

Continued innovation and investment in recycling technologies are essential. Advanced methods like hydrometallurgy and direct recycling significantly enhance material recovery and cost efficiency. 

Developing scalable, economically viable recycling solutions can ensure a sustainable supply chain, supporting economic growth.Explore more car lithium battery recycling insights and detailed articles here.