Amidst the picturesque town of Poole, England, where the tranquil charm of coastal life intertwines with modern-day innovations, a little-known provision buried within the U.S. Inflation Reduction Act (IRA) has unleashed a profound impact on the electric vehicle industry. This seemingly inconspicuous clause is rapidly reshaping the landscape of battery recycling in North America, placing the region at the vanguard of a worldwide race to challenge China’s long-standing supremacy in the field.
Embedded within the IRA, this unheralded clause bestows the coveted status of “American-made” upon EV battery materials recycled within the confines of the United States, rendering automakers who utilize such resources eligible for enticing production incentives. The repercussions of this legislative revelation have reverberated throughout the industry, instigating a frenzy of factory constructions across the nation, propelling automakers to delve deeper into research on recyclable batteries, and potentially curbing the accessibility of used EVs for buyers in developing countries.
As it stands, China commands an overwhelming monopoly over global EV battery recycling, commanding a rapidly expanding market that is projected to surge from $11 billion in 2022 to a staggering $18 billion by 2028, according to esteemed research firm EMR. This meteoric growth can be attributed to the soaring popularity of electric vehicles, leading to an increase in retired EV batteries that are in dire need of recycling.
The value of the minerals found in these batteries, including lithium, cobalt, and nickel, cannot be underestimated, with BMW’s sustainability chief Thomas Becker estimating their worth to be around 1,000 to 2,000 euros per car. However, as automakers intensify their efforts in EV production, a foreseeable shortage of these essential materials looms on the horizon. Yet, hope resides in the knowledge that these minerals can be recycled endlessly without losing their potency, as affirmed by Louie Diaz, the vice president of Canadian battery recycling firm Li-Cycle, which has secured a hefty $375 million U.S. government loan for its upcoming New York plant.
Capitalizing on the momentum set in motion by the IRA, innovative minds are racing to transform the recycling process into an “urban mining” endeavor, wherein these valuable materials are sourced from scrap rather than traditional mining. This novel approach has infused the U.S. recycling efforts with vigor, propelling them ahead of their European counterparts, who have primarily relied on enforcing recycling mandates for future EV batteries.
As the industry embarks on an ambitious journey towards achieving “closed-loop supply chains,” the emphasis lies on reincorporating recycled minerals into locally produced new batteries. This strategic move is driven not only by the quest for self-sufficiency but also by a desire to reduce reliance on Chinese suppliers, a sentiment echoed by Christian Marston, the chief technology officer at Altilium Metals.
Yet, China remains a formidable force in this domain, recently announcing more stringent standards and enhanced research support for recyclers. Notably, after the passage of the U.S. Inflation Reduction Act last year, Chinese officials decried the legislation as “anti-globalization” and accused the United States of “unilateral bullying,” underscoring the intensity of this evolving rivalry.
Amidst the flurry of activities, the global EV recycling landscape has seen the emergence of more than 80 companies, with over 50 startups attracting investments totaling at least $2.7 billion in the last six years. This exponential growth reflects the industry’s unwavering dedication to sustainability and the preservation of valuable resources.
Projections for the future appear promising, with estimates suggesting that by 2030, the volume of available EV batteries for recycling could surge tenfold, from 11.3 Gigawatt hours (GWh) in 2022 to a whopping 138 GWh, equivalent to approximately 1.5 million EVs, as stated by consultant Circular Energy Storage. Evidently, the potential for recycling batteries is vast and undeniably sustainable.
However, the journey to recycling excellence is not without challenges. Presently, there is a lack of recycling capacity in the United States and Europe, and the latter currently ships EV batteries to China for recycling, where they are shredded into a substance known as “black mass.”
To emerge victorious in the battery recycling game, the race is on to extract the highest yield at the lowest cost. The Battery Recycling Company, a Cambridge-based startup, has its sights set on this goal as it plans its first plant in 2024. Meanwhile, Ecobat, based in Dallas, Texas, has already improved its recovery process, ensuring that around 70% of battery-cell lithium is available for recycling, and they anticipate achieving even higher yields in the future.
The quest for better yields is not merely a matter of competition but also a strategic move to align with the European Union’s (EU) impending mandates. Within the next eight years, the EU plans to mandate minimum amounts of recycled lithium, cobalt, and nickel in EV batteries, driving the industry further towards recycling excellence.
Moreover, there are legitimate concerns within the industry regarding the availability of old EVs for recycling. Currently, up to 30% of Europe’s retired fossil-fuel cars find their way overseas, either to new owners in developing countries or to scrap yards. To address this, some automakers are devising innovative solutions to track and retain control of these vehicles to ensure efficient and sustainable recycling.
Ultimately, the collective vision is clear – to retain valuable battery materials within Europe and the United States, curtailing a cheaper source of transportation for developing countries and bolstering local recycling capabilities.
Undoubtedly, the U.S. Inflation Reduction Act has ignited a green revolution in the EV industry. By incentivizing battery recycling within the country, the United States has surged to the forefront of the global recycling race, challenging China’s dominant position. As recycling efforts intensify, the world holds its breath, anticipating a brighter and more sustainable future for electric vehicles. It is a race against time, a race for sustainability, and a race towards a cleaner and greener tomorrow.