Battery recycling faces long-term challenges

Technical requirements and profitability mean industry is struggling to go large-scale

With the growth in popularity of new energy vehicles in car markets across the globe, the inevitable challenge of recycling thousands of metric tons of spent power batteries needs to be addressed.

A robust industry built around the recycling of such lithium-ion batteries has yet to emerge and faces constraints such as profitability, disconnected industrial chains and lack of regulation.

Power batteries contained materials that can be recovered, processed and reused.

Domestic power battery producers such as CATL and Gotion High-Tech, as well as overseas players like Tesla, Samsung SDI and LG Energy Solution, through cooperation, mergers and acquisitions, or by themselves, are actively exploring the field.

Hwabao Securities estimates that by 2030, the market scale for battery material recycling will exceed 100 billion yuan ($15.76 billion).

However, the technical skill required is challenging to achieve for many companies and so the industry faces challenges in terms of profitability and the ability to go large-scale.

Although there has been an increase in the number of companies that have registered to recycle power batteries, only one or two out of 10 of those enterprises are able to meet related environmental protection and safety checks, according to Zhao Xiaoyong, general manager at recycler SDM.

The year 2015 was a key year for the production and sales of NEVs in China, with total sales exceeding 400,000 vehicles. It is agreed by the industry that NEV power battery life is about four to six years, meaning that in 2021 there would be an excess of power batteries reaching the end of their life cycles.

And it was not until 2021 that industry regulations were introduced for large and small industry players to ensure fairer competition.

In December, the Ministry of Industry and Information Technology issued a list of the third batch of enterprises in line with the industry standards for comprehensive utilization of waste power batteries of NEVs. This meant that there were 47 enterprises on the "white list" for the safe and effective recycling of power batteries.

According to an analyst in the know, at present, there is no leading enterprise and industry competition remains weak, scattered and disordered. However, investors should be clear that there is grim competition ahead, and it is not an easy for businesses to enter the industry.

"Efficiency of power battery recycling has become increasingly prominent," said Xiao Xu, a lecturer with the business administration school of Capital University of Economics and Business.

Xiao added that there are many uncertainties in front of many players on whether they can develop an effective recycling technology system.

If the recovery rate for a power battery can reach above 90 percent, then there will be more economic benefit to companies. However, some traditional recyclers struggle to achieve such high recovery rates, and can only enjoy the industry dividend brought by the rising price of metal resources.

At present, the recycling channels of power batteries mainly include small recycling companies and government recycling centers. As the recycling standard is not unified, the market is scattered, and a large number of illegal enterprises occupy the market share of regular ones.

In order to standardize the power battery recycling market, China has issued technical standards and government recycling outlets for power battery disassembly and recycling.

By the end of 2021, 173 enterprises had set up a total of 10,127 recycling service outlets in 31 provinces and cities, according to the Ministry of Industry and Information Technology.

Thanks to their vehicle sales and maintenance channels, automobile companies show strong competitiveness, and indeed a responsibility, in terms of the construction of power battery recycling channels.

With the help of its dealerships, Great Wall Motors has built more than 200 battery recycling outlets and improved the layout of its recycling network, according to the company.

At present, the number of batteries being recycled is small, and the resources allocated to recycling enterprises very limited. How to open up recycling channels has become an important threshold of the power battery recycling industry, an industry expert said.

Different methods available

At present, there are two methods of recycling and reusing spent power batteries－reuse in an echelon network, and disassembling and recycling. There are certain technical barriers to both approaches.

It's agreed by the lithium battery industry that the power battery pack should be replaced when its capacity declines to 80 percent. Although the power battery is no longer suitable for cars, it can be used in other areas. However, it's not easy to recycle batteries with different standards and technology.

Disassembly and recycling is currently the focus of the industry and the field of active distribution of capital. The main recovery methods are wet recovery and physical recovery. Wet recovery has a lower requirement on equipment, but has higher environmental protection requirements as it uses chemical solvents. Physical recycling includes automatic disassembly and recycling and remanufacturing processes, which can recover valuable products such as anode and cathode powder.