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Electric vehicle battery recycling issue looms over carmakers, regulators

S&P Global Market Intelligence

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Electric vehicle battery recycling issue looms over carmakers, regulators

➤ Metal prices main variable in incentives to recycle EV batteries.

➤ Refundable deposits could help overcome enforcement problem.

➤ Recycle-friendly battery pack designs cut costs, save on labor.

Egbert Lox is senior vice president for government affairs at Belgian materials technology and recycling group Umicore SA. The company is positioning itself to be one of the major players in the recycling of electric car batteries as spent packs containing cobalt, copper, nickel and lithium from end-of-life EVs start to be recovered. With a 7,000-tonne-per-year pilot recycling plant in Hoboken, Belgium, operating since 2011, the company has been sharing its observations with carmakers and EU policymakers. As a result, manufacturers are discovering the importance of designing battery packs to be easier to dismantle to cut the cost of processing. Umicore has also raised the idea with policymakers of a money-back deposit program to incentivize recycling. S&P Global Market Intelligence spoke to Lox for a deeper understanding of the measures being planned to prevent abusive battery disposal practices becoming a stain on electric cars' green credentials. The following is an edited transcript of that conversation.

S&P Global Market Intelligence: What is the current legal framework governing what happens to end-of-life EV batteries?

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Egbert Lox, senior vice president for government affairs at Umicore
Source: Umicore

Egbert Lox: We have a car recycling directive in the European Union that is pretty unique in the world, stipulating that a given percentage of the weight of a vehicle must be recycled, which was implemented more than 20 years ago. Then on top of that, they have more specific regulations on recycling the batteries. Lead is not nice to put into the environment, so that's why this was set up for lead batteries and it's working pretty well. We have the obligation to recycle a given amount of the battery.

The European Union is drafting a more specific bill for electric cars because their batteries have a big metal casing with a lot of metal that is not harmful to the environment. If you just recycle that and not all of the actual battery, you can say your obligation is met even though the more harmful elements have not been processed.

Today there is no firm obligation on an individual person to bring a used EV battery to a recycler, but if you return your car to a car dealership, it then enters the business-to-business circuit. The automaker has obligations to put this battery into the recycling stream. The rules target the company that put the battery on the market, so it's Nissan Motor Co. Ltd. or Groupe PSA, not [the manufacturer of the battery.]

Could some EV battery packs slip through the regulatory cracks and be dumped?

You've touched on the difficulty of enforcement which we have with so many well-intended regulations. People haven't found a way to close the loop because the consumer has the freedom to say "I bought this car, I bought this mobile phone. It's my property and I do what I want with it. If I wish to take it to pieces, it's my right."

This is the drama of electronic equipment recycling. It's a fantastic regulation in the EU but less than 5% comes back [for recycling] so it doesn't work. The targets increase every year but the targets are missed over and over again. There is either not enough incentive for the consumer or even simply enough knowledge on their part.

A mobile phone is a small thing and it doesn't matter if it stays in a drawer. We think just the fact that an EV battery is bigger will force people to deal with it. Putting it first into another application, like grid storage, and then on to recycling is fine. It stays in business-to-business hands, serious industries that cannot allow themselves to make a mistake. Other companies may come along not so bound by this regulation because they didn't put the battery on to the market.

How will commodity prices influence incentives to recycle?

You have this value problem with the metal prices shifting back and forth. There will be moments when people bring you batteries and it is cheaper to get the cobalt out of the mines in the Congo than out of the batteries. The risk is that they will be exported because they have a negative value. Someone will do the criminal act of taking batteries to a place where they are less expensive to get rid of because they don't have to deal with all the health, environmental and safety aspects. I think that risk is a real risk. This is what happens with electronics.

What is positive about the battery is that there are a lot of non-ferrous metals inside: nickel, copper, cobalt. One of these metals will always be high in value. Copper will always have a value and it will increase. For the cobalt and nickel elements, it varies.

Umicore has mooted the idea of a deposit for EV batteries, refundable on their return. Might that be adopted?

If people have to pay for their waste, then it ends up in the woods. A deposit at the time of purchase puts an independent value on the battery irrespective of the fluctuating metal price. It has to be set high enough. There's nothing as powerful as economics. When we say €25 for a mobile phone battery deposit, you can imagine it could be several hundred euros or more for a car. We need to do a lot to cut the cost of batteries and improve their performance, and in such a scenario, there could be some room for a few hundred euros of a deposit. The European Commission has invited us to talk and share our insights with them but, of course, it is their decision what they do with the idea. We see our task as fostering a dialogue on the basis of our insights that you cannot find in a textbook because all this stuff is new.

Do you envisage eventually being able to recycle batteries at no cost to carmakers?

It depends on metal prices. If cobalt goes back up and if nickel goes back up, why not? Battery pack design will also have an influence. Some 300 kg packs can be dismantled in 30 minutes, but there are 60 kg packs that take two hours because they were not designed for recycling. So that makes a big difference in cost because it is done manually. Eventually, when there is a queue of 500 batteries, we can think about automation, but for now, it's two Leaf batteries here, one Toyota battery there.

When we start with a new [automaker] customer, we ask them to send two representative battery packs. We measure the time we spend dismantling it, make a report of the metal content and a recommendation on how to optimize the pack for recycling. One large producer was gluing the casing and it was really hell to get it open, while another was welded shut.