Is China's recycling industry catching up with used EV batteries?
The electric vehicle (EV) industry is a hectic market. Some continuously calculate lithium price, while others search for cobalt; laboratories are fueled with millions of dollars to invent new battery technologies, and manufacturers are busy developing swappable battery platforms. But there's one vital issue encircling all this frenzy: Recycling.
China, the world's biggest EV market, has been going through an EV battery recycling revolution for some time; it is not a choice but a must. According to China Passenger Car Association (CPCA), the number of new-energy vehicles (NEVs), including battery-electric, hybrid-electric and plug-in hybrid and hydrogen fuel cell vehicles, reached 5.51 million by March 2021. The most used battery type is lithium-ion, 2,000 or 3,000 cycles, depending on various conditions, which means 5-8 years of lifespan.
As the first generation of EVs is reaching the end of their battery lives, China is pushing reforms in the domestic recycling industry for several critical reasons:
- Due to supply chain problems and geopolitical issues, raw material shortage rises along with the demand.
- Availability of critical minerals, such as cobalt and lithium, is limited and bound by geopolitical and environmental concerns.
- Concerns over mining operations due to environmental and human rights issues are rising.
Figures from the Global Times show that China's total amount of decommissioned power batteries reached 200,000 tons in 2020 and is expected to reach 780,000 by 2025. Other estimates show 720,000 tons of EV batteries will be available for recycling by that same year.
The recycling landscape in China
According to the South China Morning Post, China represents 77% of battery recycling capacity in Asia. Asia, on the other hand, has an annual capacity to process 43.5 GWh of used batteries, according to Fitch Solutions. In comparison, Europe's capacity is 40.9 GWh and the US's 26.3 GWh. The surge in the NEV market is on such a scale that McKinsey calculated that only the need for a second-life battery supply for stationary applications could exceed 200 GWh by 2030, taking the market volume up to $30 billion.
The Chinese government first issued a rule in 2018 that made all EV makers responsible for the batteries they use in their vehicles. Manufacturers are asked to set up tracking systems, while they are urged to move closer to an industry standard which would make dismantling batteries easier. In the same year, the Chinese Ministry for Industry and IT selected 17 cities and regions to start a pilot project for battery recycling.
Building the industry to meet the recycling demand will take some time. That is why China heavily focuses on the "ladder", or extending the battery life up to 2-4 years through second-life applications, before recycling. Primarily used as stationary energy storage, MIIT launched a new pilot in 2021 in 17 regions to manage the tracing and implementation of used batteries. MIIT wants the domestic EV industry to build over 10,000 recycling facilities across China to meet future demand. The call includes every stakeholder in the industry, including names like GEM, BAIC Motor, BYD and Brump, a subsidiary of CATL.
GEM, China's most significant battery recycling company, plans to reach a capacity of 200,000 tons by 2025, representing 20 times the volume the company had in 2021. CATL, China's and the world's largest EV battery manufacturer, announced plans to build a $4.96 bn recycling facility in Hubei Province last year.
The push by MIIT and the investments of significant players generally aims to eliminate the illegal and unstandardised recycling operations of thousands of small companies across China. According to Electrive, only 30-40% of the battery materials are recycled in China, while existing technology can help recover around 80%. MIIT has set up conditions to become a reliable recycler, but while the number of recycling companies jumped to 24,000, according to China News, only 47 are whitelisted.
"More has to be done"
According to Xu Heyi, the former chairman of BAIC Group, the domestic recycling industry still needs to be fully formed and requires battery recycling standards and a proactive layout. This statement aligns with CATL's plan to invest an additional $17 bn into recycling, on top of the investments announced in 2020. Not only demand but the scarcity of minerals requires it: China owns around 1% of the global cobalt reserves, and the prices jumped 40% in 2021.
The development phase of recycling, along with the urgent need, has favoured the ladder strategy in China, as a recycling company, Jiangsu Huayou, adopted it. The company buys used batteries, uses them for energy storage and then extracts the minerals, selling them to EV makers. According to Bloomberg, the company's general manager, Bao Wei, says the "moving metal mines" can reduce EV battery production costs by 20%.
CATL is already ambitious to make the industry more efficient. Through their advanced technology, founder and president Robin Zeng (aka Zeng Yuqun) said they're able to recover nickel, cobalt and manganese up to a rate of 99.3% and lithium over 90%, at the World EV and ES Battery Conference in China last summer, according to the China Project.
At the World Power Battery Conference 2022, Chinese companies discussed recycling 18 materials from used batteries, which could be utilised in NEVs, energy storage applications, and construction machinery. Recent reports indicate that China is determined to leverage the demand and recycling by 2025: Major players in the market will have a capacity of 2,500 GWh, 16 times the capacity in 2021. According to the China Project, this amount is enough to power up 56 million NEVs.
According to Advanced Industry Research Institute (GGII), around 512,000 tons of lithium batteries were dumped in 2021, and 299,000 were recycled.
China's robust investment in repurposing and recycling batteries is a good sign for the future, as the country enjoys growing overseas sales. One wishes that it was the same for plastic.