The Impact of the Top 3 Strategic Imperatives on the Electric Vehicle EV Battery Salvage Industry

Innovative Business Models

• Why:
  • Initiatives such as establishing online marketplaces to recover EV batteries create supply chain links between dismantlers and automotive OEMs or EV battery recyclers.
  • Processing batteries from third parties' (e.g., tolling) closed-loop system (taking ownership of materials across life cycle) is gaining popularity across the EV salvage industry.
• Frost Perspective:
  • An online marketplace would improve both transparency and the salvage process of EV batteries in next 2 to 3 years.
  • Major automotive OEMs in Europe and the United States will likely begin the commercialization of EV battery recycling through closed-loop manufacturing in the next 3 to 5 years.

Transformative Megatrends

• Why:
  • In response to concerns about battery end-of-life (EOL) processes, circular economy practices, particularly for lithium-ion (Li-ion) batteries, are increasing among automotive OEMs.
  • Technological advancements in hydro- and pyrometallurgical processes in EV battery recycling are helping to standardize EV battery recycling techniques.
• Frost Perspective:
  • Automotive OEMs will likely build circular economy-based factories for EV battery manufacturing-to-recycling processes at a single plant to encourage responsible manufacturing methods.
  • Battery recyclers will invest in research for standardizing the methods used in Li-ion battery recycling in Europe and United States in the next 3 to 5 years.

Geopolitical Chaos

• Why:
  • Concerns are increasing about processing centers for major raw materials used in EV batteries being concentrated on one region (China) and forcing European countries to become dependent on that region.
  • In the United States, added capacity for EV battery manufacturing through inflation reduction will boost EV battery manufacturing.
• Frost Perspective:
  • Reports including the EU’s anti-subsidy commission will likely bring regulatory changes to EV recyclers in Europe, beginning in 2025.
  • Increasing battery manufacturing in the United States will lead to EV batteries made from production scraps, which must be properly salvaged from existing facilities.

Growth Drivers

Increasing EV battery recycling capacity: In Europe and the United States, various independent recyclers and automotive OEMs are entering the EV battery recycling industry by building plants specifically for Li-ion battery recycling.

Cost of recycled materials: The economic viability of EV battery materials such as cobalt and lithium will increase and subsequently create demand for recycled EV battery materials.

Technology advancement in EV recycling: Innovations in shredding and separating processes will yield high recovery rates for materials produced from EV battery recycling processes, which will create more cost benefits for EV salvaging businesses.

Increased second life applications for batteries: New and innovative second life applications for EV batteries, such as off-grid power systems, community energy projects, and mobile power solutions, could increase the number of EV batteries designated for repurposing.

Regulatory support: In parts of Europe and the United States, governments will provide incentives for salvaging EV battery materials in parts and will grant direct tax benefits for end users that properly dispose of EV batteries.

Growth of online channels for EV battery salvaging: Online marketplaces for EV batteries will link EV recyclers to customers for more easily purchasing and selling used EV batteries.

Growth Restraints

EV recycling standardization: Different EV battery chemistries are used across Europe and the United States, which is why battery recyclers target specific battery chemistries for large-scale recycling.

No direct regulatory framework: An official regulatory framework to govern the EV battery salvage industry does not yet exist in Europe or the United States. However, regulations for different areas of the EV battery value chain partially govern the larger EV battery salvaging industry.

Collection of used EV batteries: Automotive OEMs and EV recyclers have not yet established standards by which to procure EV batteries from end users for their EV salvage yards.

Lack of trust in used EV batteries: Buyers of EVs for second life applications are still unclear about the condition of used batteries and their extended lifespan, which makes purchasing decisions difficult.

Hazardous disassembly process: There are risks associated with fire and the handling of unknown hazardous materials during the disassembly of old EV batteries during the recycling process. Independent EV battery recyclers in the United States and Europe face challenges in properly disassembling used EV batteries.