Battery recycling rush in city mines

Editor's note：Shi Shuai is a partner at Roland Berger. The article reflects the author’s opinions and not necessarily the views of CGTN.

The global demand for batteries is set to witness a significant surge, with projections indicating a requirement of approximately 4400GWh by 2030. This demand encompasses various sectors, including light vehicles, medium and heavy commercial vehicles, consumer electronics, electric two-wheelers and three-wheelers, electric ships, eVTOL, and storage batteries. Core materials such as nickel-based, lithium iron phosphate (LFP), and lithium manganese iron phosphate (LMFP) cathodes are expected to be at the forefront of this demand.

We believe that the market for recycling retired batteries is poised for rapid growth after 2025, driven by the gradual release of EV scrappage demand, policy incentives, and strong downstream demand for recycled products. After their first life cycle, batteries enter the collection stage and are collected via various channels. In the future, it will be collected primarily through original equipment manufacturer (OEM) channels. This is followed by the disposal process, which includes secondary use — repackaging battery packs or select modules/cells for reuse, and recycling — aimed at recovering valuable metals from the batteries. This stage is highly significant for OEMs due to the rising prices and scarcity of precious metals.

The market size for battery recycling in China is expected to grow rapidly from over 10 billion yuan ($1.37 billion) now, to 24 billion yuan by 2025. After 2025, the battery recycling business in China is expected to experience accelerated growth, reaching 110 billion yuan by 2030.

OEMs will continue to play a leading role in the short term. As primary stakeholders for retired battery recycling, there would be policy-driven compliance pressure for OEMs. In addition, financial incentives would also stimulate manufacturers further on extracting residual value. Additionally, supply chain stability is a key driver, as fluctuations in the supply of upstream battery raw materials make recycling essential for maintaining a stable supply.

Battery recycling and repurposing is a "scenario-based" business. These scenarios include early retirement of batteries due to quality issues or rapid degradation during normal use. The second scenario occurs when battery capacity drops to 80 percent or in the event of accidents or disasters. The third scenario is vehicle scrappage, where the battery is retired along with the vehicle.

Depending on the scenario, batteries may be distributed through different channels. OEMs have a channel advantage due to their authorized dealership platforms, which they can leverage for battery collection. In contrast, third-party recycling channels are often more useful when batteries retire along with the vehicle.

The core capabilities of the industry are undergoing rapid development. Strict qualification reviews result in high entry barriers. Although the number of companies on the "whitelist" has increased, the list remains relatively small. Obtaining industry entry qualifications is difficult and compliance costs are high, requiring rigorous environmental reviews and capability assessments. The application cycle for secondary utilization and recycling qualifications is relatively long and involves significant compliance requirements and financial costs. In the future, industry concentration will rise and become increasingly standardized, with the government strictly regulating the market to ensure that scrapped batteries flow into the right channels.