An Unseen Hurdle Awaits Battery Recyclers – Many May Lose Power Before The EV Market Matures

As electric vehicles (EVs) accelerate their ascent to the top of the global automotive market, a cottage industry of companies servicing the market has arisen. 

Manufacturers like Tesla Inc. TSLA and NIO Inc. NIO are ramping up production, meaning millions of new batteries will be created and installed in cars around the globe. The batteries, manufactured by companies like FREYR Battery SA FREY and Microvast Holdings Inc. MVST, contain valuable precious metals that are both labor intensive and environmentally taxing to extract from the earth.

To help ease the burden, many battery recycling ventures have sprung up. These companies take used batteries and the scraps from the manufacture of new ones and save the battery metals needed to feed ever-increasing demand.

And global recycling capacity is exploding. This capacity will, according to research from Circular Energy Storage, increase tenfold by 2025. 

But there is a problem.

By that year, recycling capacity is estimated to outstrip demand by threefold. This will put enormous financial strain on recyclers that do not have the raw materials to actually recycle.

This trend is likely to continue for some time, possibly until the mid-2030s for one primary reason: battery life. The market has created remarkably efficient batteries that have a fairly long shelf life in their original vehicles. A secondary market exists that will give them a second chance in less-intensive applications like energy storage. It is not until this point that they will be able to be recycled.

Until a critical mass of these first-generation batteries reaches the end of their lives, the bulk of raw materials feeding the recycling industry will come in the form of the scraps that naturally come from the manufacture of new batteries. 

For many recyclers, ensuring a steady stream of these scraps will prove extremely difficult. Supply chain issues, price spikes and bidding wars are just some of the problems that await.

However, vertical integration can help companies move beyond the traditional standalone model to acquire resources which are in short demand. As such, it is a model that may help some recyclers not only survive until supply catches up to demand but thrive.

RecycLiCo Battery Materials Inc. AMYZF is a leader in what it calls an integrated approach. Through vertical integration of its technology with potential strategic partners, RecycLiCo plans to access a steady stream of scraps by integrating their technology alongside the battery production site. The recycled battery-ready materials would then flow from RecycLiCo back to the strategic partner to create more batteries - all on one site.

This integrated approach may prove to be the model that is best suited for today's market conditions – while helping set up even greater future profitability.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.

Featured photo by Henry & Co. on Unsplash