Strategy& and RWTH Aachen expect a large supply of materials and falling costs - in recycling and for batteries. However, the volume of used batteries threatens to significantly exceed recycling capacities.
Battery recycling is becoming a viable and sustainable business, according to Strategy& and RWTH Aachen University.
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Several companies are currently investing in the recycling of lithium-ion batteries. But the factories of Mercedes-Benz, Volkswagen, BASF or Northvolt have one thing in common: they are not working to capacity. Primarily, they feed on the production waste from the gigafactories. Only 30% of the material processed currently comes from spent batteries. But the tide is likely to turn from 2030 onwards, when the batteries of the first electrification wave reach the end of their lives.
This is the conclusion reached by the consulting firm Strategie& and the Production Engineering of E-Mobility Components (PEM) chair at RWTH Aachen University in a joint study analyzing the development of the battery recycling market in the EU. Their conclusion sounds encouraging: battery recycling is developing into a viable and sustainable business.
Return of Spent Batteries and Scaling Drive Business
Global demand for high-voltage lithium-ion batteries in the automotive sector is estimated to grow to 3.4 TWh by the end of the decade and could reach 6.5 TWh in 2040. Estimated demand from Europe is 0.9 TWh in 2030 and 1.3 TWh in 2040, contrasting with a European recycling market that may increase its capacity roughly tenfold from 0.1 to 1 TWh within a decade by 2040. The recycled volumes could cover up to two-thirds of the raw material requirements for the production of active battery material and drive down the cost of new batteries. For new cathode active material, potential savings are in the range of 2 to 4 euros per kWh, according to the study.
The value added in battery recycling grows with the availability of spent batteries and the scaling of recycling capacities. The latter is likely to vary depending on the stage in the recycling process. The value added in the recycling of batteries is divided into three sections: preparation, pretreatment and main treatment.
Decentralized Spokes and Capital-intensive Hubs Shape the Market
In reprocessing, the EoL batteries are first discharged, dismantled and subjected to heat treatment. The pretreatment includes the subsequent shredding and separation of the different materials. In addition to the non-active material from the housing or the electrical leads, the so-called black mass (Batteries Active Materials Mixture, BAMM) remains. This makes up around 40% of the material recovered, half of which is made up of the valuable raw materials lithium, manganese, cobalt and nickel. According to the study, the process chain up to this point is likely to take place mainly in decentralized recycling plants, so-called spokes, distributed across the country. The technology required is comparatively not very capital-intensive.
The main treatment of black mass, on the other hand, is extraordinarily capital-intensive. Here, centrally located "hubs" will take over the pre-treated waste volumes and extract raw materials from them for the construction of new batteries. For efficiency reasons, recyclers are likely to rely increasingly on chemical-based hydrometallurgy instead of pyrometallurgical processes that separate materials at high temperatures. According to the study authors, ideal economies of scale for battery recycling result when about ten spokes each serve one hub. For the year 2030, the authors expect 6 hubs across the EU. Recycling costs could drop by about half in this distribution.
Up to 60% of the Active Material from Recycling
The output of recycled raw materials is expected to far exceed the legally required quantities in battery production. According to the EU Battery Regulation, which was updated in August 2023, 80% of the lithium in each battery and 95% each of the cobalt, nickel and copper contained must be recovered via recycling. Newly produced batteries must contain a minimum recycled content of 12% lithium, 15% nickel and 26% cobalt. Only for recycled cobalt could there be a temporary bottleneck in the early 2030s, according to the study.
If all EoL batteries and production wastes were recycled, battery manufacturers in the EU could obtain up to 60% of their active material from recycling in 2040. However, closed-loop recycling will not be achievable by then, according to the study.
"Ideal Market Environment for the Battery Industry"
The outlook for the battery recycling market is promising, but to benefit from it, investment is needed. As early as the middle of the next decade, available spent batteries and production waste will more than double recycling capacity. Only by expanding recycling capacities can the waste volumes be fully recycled. According to the study, investments of 2 billion euros are required by 2030, and an additional 7 billion euros by 2035. In particular, the capacity gap for spokes in pre-processing needs to be closed.
In view of the expected high material supply and falling recycling costs, the authors conclude their study with an optimistic outlook: "This will create an ideal market environment for the battery industry."
