The automotive electrification trend is on the rise where people are demanding electric vehicles (EVs) and hybrids. This trend is being driven by a higher demand for urban vehicles, rise of megacities and rising oil prices. It is estimated that by 2020, 7 percent of the world’s transportation market will be EVs. The demand for EVs and hybrid cars has led to a higher global demand for lithium but what will happen to these cars when they reach their end of life? Can Li-ion batteries be recycled? These questions have shifted the focus towards ensuring the supply of materials needed for the green revolution through recycling and reuse of these batteries.
There are a number of challenges that are expected to impact the supply of lithium. Although there is sufficient amount of this precious resource available globally, most of it i.e. 70 percent is concentrated in Argentina, Bolivia and Chile. Any sort of unrest or political instability in the region will affect the supply of lithium. This will definitely raise the cost of the battery and that of the vehicle.
Lithium is also used in other industries other than the automotive industry such as ceramics and glass, construction and pharmaceuticals. The automotive industry only uses a small fraction of the total lithium consumed. Right now, the automotive industry takes only a quarter of lithium consumption but this number will rise to 40 percent by 2020.
Governments and private partners have come together to secure lithium resources and it is being treated as a future source of energy. For example, Japan has forged an alliance with Bolivia, Toyota, Magna International and Mitsubishi have also come together to safeguard this crucial commodity. These partnerships are crucial as they create a strong foothold in the supply chain to increase stakeholders, eliminate competition and control price fluctuations.
The Need for Recycling
Recycling companies are looking at how lithium batteries can be reused or how the batteries can be recycled after reaching their end of life. However, recycling the whole battery does not make economic sense as they only contain small amounts of lithium carbonate. The average lithium cost associated with the production of a Li-ion battery is 3 percent. Recycling of Li-ion batteries is valuable due to precious metals such as nickel and cobalt than are more priced than lithium. Lithium-ion is 100 percent recyclable but due to current economics, it does not make sense to recycle it.
The cost of recycling lithium is higher than producing it. This field is also not highly competitive but due to the high number of the expected EVs in the market, recycling will become an important option to supply this material for battery production.
Closed loop recycling, where the recycled stuff is sold back to OEMs will help mitigate price fluctuations of metals and other compounds. EV battery recycling will be an important part of the value chain in the future when more EV batteries will come through the waste stream.
Recycling Li-ion Battery Challenges
The business of recycling batteries is driven by price as the same technology is used across the board. Price in a competitive environment cuts profitability for a recycling company. The only viable option is setting up small scale recycling plants closer to the manufacturers.
This is an unexplored avenue and not a lot is known on profitability of the business. Financial investments are, therefore, required by the market participants to come up with waste disposal services.
The lithium recycling business is in its infancy stage and there is no recycling plant anywhere in the world that deals with Li-ion batteries only but evaluations are on-going. Recycling Li-ion batteries will be the main source of the supply of lithium. Any price fluctuation of lithium will impact the price of the car and recycling will be the only cushion against geo-political factors or other barriers that would cause the cost of the EV to go up.