EV battery recycling powering up in China
Production surge, sales driving rapid growth of green vehicle parts biz
Electric vehicle or EV battery recycling in China is growing into a multibillion dollar business as investors are eyeing opportunities in surging volumes of retired new energy vehicles, or NEVs. Analysts said enhanced industry standards and regulations can ensure safety and avoid pollution.
According to a report by the LeadLeo Research Institute, from 2017 to 2020, the market size of China’s EV battery recycling industry increased from 2.9 gigawatt-hours to 21.2 GWh, with a compound annual growth rate of 78.4 percent.
Last year, the total number of retired EV batteries in China exceeded 200,000 metric tons, which equaled about 25 GWh, and the market size was 10 billion yuan ($1.55 billion), said the China Automotive Technology and Research Center.
By 2025, total retired EV batteries will climb to about 780,000 tons, which equals about 116 GWh, according to the CATRC. The industry will see a market value of over 40 billion yuan by then, said EverBright Securities.
A surge in production and sales of NEVs has laid the foundation for rapid growth of China’s EV battery recycling industry, said Zheng Keyu, an analyst at LeadLeo.
Production and sales of NEVs reached about 1.22 million and 1.21 million units in the first half, respectively, both up by 200 percent yearon-year, according to the China Association of Automobile Manufacturers. The association predicts NEV production and sales growth are likely to exceed 40 percent over the next five years.
“The purpose of EV battery recycling is to reduce pollution caused by improper handling of heavy metals, reduce wastage of valuable metals and cut production costs of batteries and NEVs,” Zheng said.
“Although the industry’s prospects are very promising, China’s EV battery recycling is still in the early stages of development. Since the 13th Five-Year Plan period (2016-20), the government has rolled out a series of recycling-related policies to strengthen supervision, establish recycling standards and put in place mechanisms to bolster a good environment for development,” Zheng added.
Earlier in 2017, the Ministry of Industry and Information Technology and three other ministry-level administrations released an action plan promoting development of the EV battery industry. The plan stated that battery recycling is an area of focus that the government will support.
In March, it was first written into the Government Work Report that efforts are needed to accelerate the establishment of the EV battery recycling system.
In July, the National Development and Reform Commission released a written notice on its
development plan of the circular economy during the 14th Five-Year Plan period (2021-25). It said the government will enhance the regulatory mechanism for EV battery tracking.
In August, the MIIT and four other ministry-level administrations released a document on cascade utilization of power batteries, which involves reusing retired batteries from NEVs in other facilities, to encourage cooperation between
NEV manufacturers, power battery producers and recyclers.
Answering the call, local governments have begun stepping up efforts to promote the development of the EV battery recycling sector. Jiangsu province has already set up 907 EV battery recycling centers and Shanghai has 364 recycling servers. The city also initiated a full life cycle tracking and regulation system for EV batteries.
The booming market has attracted
numerous businesses to take a share. According to Qichacha, a company that tracks business registrations, the total number of companies engaged in EV battery recycling currently stands at around 15,000. The number of newly registered companies in the first half reached 9,435, up 2,611.2 percent year-on-year.
According to LeadLeo, China’s EV battery recycling industry has seen increasing cooperation between NEV manufacturers like BYD Co
Ltd, battery producers like Contemporary Amperex Technology Co Ltd, raw material processors like Huayou Cobalt and recycling institutes like GEM Co Ltd.
In August, Eve Energy Co Ltd announced a tie-up with GEM. GEM pledged to supply over 10,000 tons of nickel products made from battery recycling for 10 consecutive years beginning in 2024, while Eve will provide retired batteries that contain nickel to GEM.
“Currently, the EV battery recycling industry still encounters problems like irregular recycling methods, low recycling and utilization rates, safety issues, relatively high recycling costs and difficulties in material separation for recycling end-of-life batteries,” Zheng said.
According to Zheng, currently, there are two main ways to achieve EV battery recovery. The first is cascade utilization and the second involves material separation and reuse for recycling end-of-life batteries. The former is to test the batteries whose performance has fallen below 80 percent of the initial performance in EVs, and then select those with better performance for secondary use in certain products. The latter is to dispose of retired batteries — generally those whose remaining capacity is less than 30 percent of the original — and recycle valuable metals such as nickel, cobalt, manganese, copper, aluminum and lithium.
Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University, said many retired NEV batteries have been used in power storage facilities. “Cascade utilization of power batteries makes up an important part of the circular economy,” Lin said.
In 2020, about 87 percent of the recycled batteries underwent cascade utilization, and about 13 percent were disposed of with material separation processes, LeadLeo said.
Zheng said that for batteries recycled through cascade utilization, there are many technical barriers. The assessment accuracy of the residual value of retired batteries is not high, and the lack of historical data of retired batteries makes it difficult to fully evaluate their performance and reliability.
“In addition, there are no sound standards and regulations to guarantee battery dismantling, transportation and recycling during the process of cascade utilization at present. As a result, many companies are reluctant to step into the sector to avoid losses caused from accidents,” Zheng said.
Lin said the situation is even more commonly seen in EV battery recycling from electric bicycles and three-wheeled vehicles.
“Currently, the government is calling for more efforts from electric bicycle producers to recycle batteries retired from their own products. However, a majority of them lack required technology and ability.”
Zheng said: “Owing to the poor performance and high safety risks of batteries that were in the market in previous years, very few of them can be recycled for secondary use. Thus, many recyclers were competing for limited resources and drove up recycling costs, leaving little room to make profits.”
In terms of end-of-life battery disposal, the industry currently lacks sufficient evaluation mechanisms to determine residual values, as it is in need of standards and regulations for recycling. Many retired batteries are processed through illegal channels. This severely pollutes the environment, Zheng said.
In addition, the cost of disposing of end-of-life batteries is still relatively high as the process requires high-level techniques of dismantling lithium batteries to avoid risks of explosion and pollution caused by cobalt, a toxic metal contained within, Zheng said.
“Therefore, enhanced industry standards, regulations and the advancement of recycling technologies are urgently needed for the industry’s sustainable development.”
The purpose of EV battery recycling is to reduce pollution caused by improper handling of heavy metals, reduce wastage of valuable metals and cut production costs of batteries and NEVs.”
Zheng Keyu, an analyst at LeadLeo