Logistics: The Key to Driving Electric Vehicle Battery Recycling

The Demand for EV Battery Recycling

EV battery recycling is becoming one of the key factors in the development of the electric vehicle sector. Recovering materials such as cobalt, copper, lithium, and nickel from end-of-life EV batteries not only reduces dependency on new natural resources but also mitigates negative environmental effects. According to J.B. Straubel, CEO of Redwood Materials Inc., a circular supply chain can provide most of the materials needed for new battery production, helping to minimize the need for environmentally harmful mining activities.

Straubel, who spent 15 years at Tesla before founding Redwood in 2017, noted that in recent years, battery recycling processes have become cleaner and more efficient and will continue to improve in the future. Redwood currently operates a facility near Reno, Nevada, and is constructing a second site in Charleston, North Carolina. In September, the company announced a partnership with BMW North America to recycle lithium-ion batteries from BMW electric vehicles, with over 700 locations participating, including dealerships, distribution centers, and internal facilities.

Challenges with Volume and Reverse Supply Chain

Despite the significant potential of the EV battery recycling industry, it is still in its early stages of development. According to Kurt Kelty, Vice President of Battery Cells and Battery Packs at GM, collecting and recycling used battery packs remains a challenge. Most recycled batteries come from older models, such as GM’s Volt EV, and from scrap generated during manufacturing processes.

The current number of electric vehicles on the road is relatively low, and new EV batteries typically last more than 10 years, limiting the short-term supply of used batteries. According to a report by Boston Consulting Group, the demand for cathode materials will more than double between 2025 and 2030, but most recyclable battery materials by 2035 will still come from manufacturing scrap. Only then will end-of-life EV batteries surpass production scrap as the primary source of recycled materials.

One of the major challenges for the industry is building an efficient reverse supply chain. Kelty emphasized that this supply chain must ensure affordable transportation costs, especially at scale, while focusing on safety due to the hazardous nature of the materials involved. Developing regional supply chains is also critical, as long-distance transportation of batteries significantly increases costs. Companies like GM are partnering with logistics service providers to develop more efficient used battery collection services.

Changes in Battery Technology and the Impact on Recycling

Another issue the battery recycling industry faces is the changing technology in battery types. China is currently widely using lithium iron phosphate (LFP) battery technology, and this type of battery may see greater adoption in the U.S. However, according to Kelty, used LFP batteries hold less value compared to other battery types due to their recycling challenges and lower material recovery value. Straubel also acknowledged that recycling LFP batteries may be less cost-effective, but he emphasized that valuable materials can still be recovered from these batteries.

The Importance of Policy Support and Infrastructure

Governments also play a crucial role in advancing the battery recycling industry. The U.S. Inflation Reduction Act of 2022 has opened up opportunities for recycling companies by allowing them to qualify for tax credits when using recycled battery materials. In September 2024, Ascend Elements, another battery recycling company, received a $125 million cost-sharing grant from the U.S. Department of Energy to promote domestic production of advanced batteries and battery materials.

In addition, companies need to invest in infrastructure to meet the growing demand for recycling. Ascend Elements is a pioneer in developing a strong domestic supply chain to reduce reliance on international sources.

The Future of EV Battery Recycling

While the EV battery recycling industry is still in its early stages, its market potential is immense. According to McKinsey's analysis, global EV battery recycling market revenues are expected to exceed $95 billion annually by 2040. This will not only help boost the electric vehicle market but also reduce the environmental impact of extracting new resources.

The EV battery recycling industry plays a pivotal role in building a greener and more sustainable future for the electric vehicle sector. With government policy support, technological solutions, and efficient supply chains, battery recycling will not only address resource challenges but also help drive the growth of the global EV industry. However, to fully unlock this potential, companies must invest in advanced recycling technologies and develop smart, efficient logistics strategies.

By Phong Le