A relatively obscure clause buried within the U.S. Inflation Reduction Act is rapidly transforming the landscape of electric vehicle (EV) battery recycling in North America. With the clause in effect, companies are scrambling to recycle EV batteries in the region, positioning it as a key player in the global race to challenge China’s dominance in this field.
The pivotal aspect of the IRA’s clause lies in its provision that automatically designates EV battery materials recycled in the U.S. as American-made for subsidies, regardless of their origin. This qualification holds significant weight as it makes automakers eligible for EV production incentives when using U.S.-recycled battery materials.
Also, don’t forget that you can get discounted new car pricing with a free quote through qualified local dealer partners.
According to Reuters, this legislation has spurred a surge in the construction of U.S. factories, encouraging automakers to intensify their research into more recyclable batteries. The ripple effects of this development could potentially make it more challenging for buyers in developing countries to acquire old used EVs.
Presently, China retains an iron grip on EV battery recycling in a global market projected to grow exponentially, from $11 billion in 2022 to a staggering $18 billion by 2028, as reported by research firm EMR. As EVs become increasingly prevalent and reach the end of their lifecycle, the demand for battery recycling is set to soar.
Key minerals found in these batteries, such as lithium, cobalt, and nickel, have a considerable value, ranging from 1,000 to 2,000 euros per car, according to Thomas Becker, BMW’s sustainability chief.
The looming concern is the potential scarcity of these crucial materials in the near future due to the rapid increase in EV production. However, the silver lining is that these minerals can be recycled indefinitely without losing their potency, as affirmed by Louie Diaz, vice president at Canadian battery recycling firm Li-Cycle.
The IRA has redefined recycled battery materials as “urban mined” or materials recovered from scrap, rather than sourced from mining. This unique approach has given U.S. companies an edge over their European counterparts, who have chosen to focus on mandates, including minimum requirements for recycled materials in future EV batteries.
Nonetheless, European recycling firms like Ascend Elements and Li-Cycle are planning to establish recycling plants in the coming years, but the accessibility of funding and the “made-in-America” incentive have already set several U.S. plants into motion.
The ultimate goal is to establish “closed-loop supply chains,” where recycled minerals are utilized in locally produced new batteries, eliminating dependence on Chinese imports. Many view controlling their own supply chains as crucial to secure their positions in the competitive EV market.
Despite the promising progress in North America, China remains at the forefront of the race, introducing tougher standards and increased support for recyclers. Chinese officials criticized the IRA as “anti-globalization” and accused the U.S. of “unilateral bullying” after its passage in the previous year.
Globally, over 80 companies are involved in EV recycling, with more than 50 startups attracting substantial investments from corporate investors, including automakers, battery manufacturers, and mining giants. The volume of EV batteries available for recycling is projected to increase tenfold by 2030, reaching around 138 GWh, equivalent to roughly 1.5 million EVs.
While EV batteries can last for a decade or more, some experts anticipate that by 2040, approximately 40% of battery materials used in new EVs could come from recycled stocks.
Despite the rapid growth in recycling efforts, the current recycling capacity in the U.S. and Europe is still limited. Many batteries are shredded into “black mass” and sent to China for recycling. Companies like The Battery Recycling Company and Ecobat are striving to improve recovery processes to obtain higher yields of valuable materials.
The EU is also taking significant steps to promote recycling and impose strict conditions on recycling outside Europe, further driving the push for local recycling capabilities.
One of the challenges ahead is to find old EVs for recycling, as a significant portion of Europe’s old fossil-fuel cars end up overseas. Efforts are underway to maintain control over batteries, such as leasing models adopted by Nissan and Nio.
Overall, the pursuit of efficient EV battery recycling and the establishment of sustainable supply chains remain critical for the global automotive industry’s greener and more eco-friendly future. The U.S. is making significant strides in this direction, but the competition is fierce, and all eyes are on the unfolding race to challenge China’s supremacy in this pivotal field.
