Dead EV batteries turn to gold with US incentives

Dead EV batteries turn to gold with US incentives

A little-known provision in the U.S. Inflation Reduction Act is causing companies to rush to recycle electric vehicle (EV) batteries in North America, positioning the region as a global leader in challenging China’s dominance in the field. This provision states that EV battery materials recycled in the U.S. automatically qualify as American-made for subsidies, regardless of their origin. This qualification is crucial because it allows automakers using U.S.-recycled battery materials to receive incentives for EV production. According to industry officials and experts interviewed by RushHourDaily, this provision is sparking a boom in U.S. factory construction, encouraging automakers to explore more recyclable batteries, and potentially making it more difficult for buyers in developing countries to purchase used EVs.

China currently handles almost all EV battery recycling in a global market that is projected to grow from $11 billion in 2022 to $18 billion by 2028, according to research firm EMR. As the number of EVs increases and they reach the end of their lifespan, the demand for battery recycling will continue to grow. The minerals found in these batteries, such as lithium, cobalt, and nickel, are valuable and can be worth between 1,000 euros ($1,123) to 2,000 euros per car, according to BMW sustainability chief Thomas Becker. However, these materials may become scarce in the coming years as automakers ramp up EV production. Fortunately, these materials can be recycled indefinitely without losing their power, as stated by Louie Diaz, vice president at Canadian battery recycling firm Li-Cycle. Li-Cycle has received a $375 million U.S. government loan for a New York plant that is set to open later this year, and Diaz credits this funding for expediting the investment decision.

The IRA’s treatment of recycled battery materials as locally sourced “urban mined” materials has motivated U.S. companies to accelerate their recycling efforts, surpassing their counterparts in the European Union. While recycling firms in Europe, such as Ascend Elements and Li-Cycle, are planning to establish plants in the next few years, the availability of funding and the made-in-America incentive have already led to the construction of several recycling plants in the U.S. Mike O’Kronley, CEO of Ascend Elements, emphasizes that the IRA has changed the demand equation for battery materials, and it is crucial to retain these valuable materials for reuse in EVs.

The race is on to establish “closed-loop supply chains” where recycled minerals are used in locally produced new batteries. Christian Marston, chief technology officer at Altilium Metals, states that everyone wants to control their own supply chain and reduce dependence on China. However, China still leads the race and has recently announced stricter standards and increased research support for recyclers. Chinese officials have criticized the IRA, describing it as “anti-globalization” and accusing the U.S. of “unilateral bullying.”

Globally, there are over 80 companies involved in EV recycling, with more than 50 startups attracting at least $2.7 billion in investments from corporate investors, including automakers, battery makers, and mining giants like Glencore, according to data. The volume of EV batteries available for recycling is expected to increase more than tenfold by 2030, reaching 138 GWh, equivalent to approximately 1.5 million EVs, according to consultant Circular Energy Storage. Electric vehicle batteries have a lifespan of 10 years or more, and industry officials predict that by 2040, 40% of battery materials used in new EVs could come from recycled stocks.

Currently, there is limited recycling capacity in the U.S. and virtually none in Europe. In Poole, England, car breaker Charles Trent Ltd has established two lines for deconstructing old vehicles and recycling their components. The company has created special containers for EV batteries, which are either sold for research purposes or used by retrofitters converting fossil-fuel cars to electric. This is partly due to the lack of recycling facilities for EV batteries. In Europe, EV batteries are currently shredded into “black mass” and shipped to China for recycling.

The competition is fierce to extract the maximum value from this “black mass.” Companies like Ecobat have improved their recovery process, making around 70% of battery-cell lithium available for recycling. Thea Soule, chief commercial officer at Ecobat, believes that yields could eventually reach levels close to 90% to 100%. The European Union plans to mandate minimum amounts of recycled lithium, cobalt, and nickel in EV batteries within eight years and impose strict conditions on recycling outside of Europe. Kurt Vandeputte, senior vice president at Umicore, a Belgian materials firm, states that these conditions will effectively keep recycling local.

There are also concerns about sourcing old EVs for recycling. Currently, up to 30% of Europe’s old fossil-fuel cars are exported to developing countries or scrapped. Some automakers are exploring ways to track these EVs. For example, Nissan leases EVs in Japan to maintain control of the batteries, while Chinese EV maker Nio leases batteries to customers to retain ownership. Keeping these minerals in Europe would eliminate a cheaper source of transportation for developing countries. BMW’s sustainability chief, Thomas Becker, hopes that the value of battery materials will make recycling more attractive than selling vehicles abroad. However, Europe must focus on ensuring that EV batteries do not slip away.

In conclusion, the little-known provision in the U.S. Inflation Reduction Act is driving companies to recycle EV batteries in North America, challenging China’s dominance in the field. This provision qualifies U.S.-recycled battery materials as American-made for subsidies, incentivizing automakers to use them in EV production. The boom in U.S. factory construction and the focus on research for recyclable batteries are expected to make it harder for buyers in developing countries to purchase used EVs. While China currently leads the race in EV battery recycling, the U.S. is rapidly catching up, and Europe is lagging behind. The global demand for battery recycling is set to increase significantly, and establishing closed-loop supply chains is crucial for sustainability.

About News Team

Hi, I'm Alex Perez, an experienced writer with a focus on lifestyle and culture news. From food and fashion to travel and entertainment, I love exploring the latest trends and sharing my insights with readers. I also have a strong interest in world news and business, and enjoy covering breaking stories and events.

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