- EV BATTERIES
- Business Models
- Circular Economy
Business Model Innovation Will Be Needed to Support EV Battery Recycling
As EVs become more ubiquitous in the next decade, it will be essential to expand the recycling of end-of-life batteries for disposal and to provide raw material feedstock for new batteries. Guidehouse Insights’ recently published Developing Solutions for Recycling End-of-Life EV Batteries report delves into the technologies and business models around battery recycling. While the core technology of reprocessing cells into battery feedstocks is reasonably well understood at this point, the business side is still relatively immature. However, companies are working on solutions, including a startup called Currents.
Challenges of EV Battery Recycling
One of the leading battery reprocessing companies in North America today is Redwood Materials. Redwood’s first plant in Nevada has been producing enough so-called “black mass” for the production of 6 GWh of new cells annually, or enough for approximately 60,000-80,000 new EVs. Black mass is a powdery mix of the various cathode materials, including nickel, cobalt, manganese, and other materials, that is applied to the cathode.
While Redwood does reprocess some EV batteries, the quantities available are still very small, since the vast majority of EVs on the road today were built in the last 6 years, and vehicles in the US currently have an average age of 12.5 years, with many lasting far longer. Redwood gets about half of its intake from production scrap at the Tesla/Panasonic plant in Nevada and the AESC plant in Tennessee. Most of the rest comes from consumer electronics batteries; Redwood has established a partnership with Audi to put battery collection stations at its US dealerships.
The biggest challenge of battery recycling will likely be how to cover the cost of collecting end-of-life batteries, processing them, and getting them to recycling centers. In North America, most vehicles that have reached end-of-life go to dismantlers or wrecking yards, where usable components are removed and resold as service parts or for refurbishment, and metal structures are crushed and sent to iron, steel, or aluminum foundries or mills. Most dismantlers have had little or no experience with EV batteries yet and don’t know what to do with them.
New Battery Recycling Business Models
Currents is building an online business-to-business marketplace for recovering and repurposing EV batteries. The goal is to work with automakers to get data on EVs based on the vehicle identification number (VIN) and build model to estimate the likely health and value of the battery. When a dismantler gets a battery, they can go into the site, enter the VIN, and get a price that an automaker or other buyer is willing to pay for the battery. Other buyers include recyclers but also those with second-life applications such as stationary storage.
If the dismantler accepts the price, Currents will work with a logistics partner to arrange pickup and delivery to an aggregation facility from which batteries will be redistributed to buyers. The dismantlers get paid, and the logistics providers and Currents take a cut of the purchase price paid by the buyers. That purchase price will ultimately need to lie somewhere between the logistics and reprocessing cost and the revenue that can be generated from selling the black mass back to cell manufacturers for new batteries.
Currents is preparing to start a pilot with an unnamed automaker and a recycler. It remains to be seen if this particular model will generate enough revenue to cover the cost of all participants in this value chain, or if something like a battery leasing model or another solution entirely is the best approach. But there will probably be a variety of attempts before the end-of-life battery market starts to reach critical mass later this decade.