The rising price of power batteries has made the cost of batteries in a car account for more than 40%, or even more than 50%.” Recently, in a forum, the chairman of Changan Automobile Zhu Huarong’s speech, triggered a wide range of discussions in the industry.
Zhu Huarong said that according to various data calculations, the cost of a single vehicle of different new energy models of Changan Automobile rose by 5,000 to 30,000 yuan. “‘Expensive electricity’ seriously affects the product benefits to reach, the battery cost rise is much greater than the value of technological progress to the user.”
New energy car companies suffer from expensive electricity for a long time. Previously, Guangzhou Automobile Group Chairman Zeng Qinghong said that the car factory. And CATL is also complaining, “they are just a little bit on the edge of the profit struggle”.
In the “expensive electricity” behind, is the power battery upstream raw material prices skyrocketed. Since this year, the main raw materials for power batteries lithium, cobalt, and nickel have increased significantly, and the price of lithium is at a record high. Shanghai Steel Association recently released data showing that the average spot price of battery-grade lithium carbonate even reached a high of 59 million RMB/ton.
In the face of the continued high price of raw materials, promoting the recycling of used power batteries and key metal resources, or will become one of the key paths to crack the “expensive electricity”.
According to the report “Power Battery Full Life Cycle Asset Operation Management Study” launched by China Electric Vehicle Council 100, most retired batteries have a high residual capacity (70-80% of rated capacity) and can be utilized in a variety of scenarios. At the same time, retired batteries contain valuable metals such as lithium, cobalt and nickel, which can be recycled for resource use.
However, on the other hand, if the used power battery does not undergo professional and large-scale regeneration and disposal, its internal potential pollution sources will be directly exposed to the environment, and the proliferation of organic substances, heavy metals and other components will enter the environment, which will not only bring harm to human health, but also cause irreversible damage to the air, water and soil, and have a large negative impact on the ecological environment and production life.
Therefore, power battery recycling is also known as the “mine on wheels”, and is the last and important part of the whole life cycle asset management of power batteries. How to recycle retired batteries in a more scientific way will be a common test for all participants in this industry chain.
Around this topic, this article tries to answer the following three questions.
- What kind of development stage has power battery recycling gone through?
- What are the pain points of power battery recycling at present?
- How to standardize the development of power battery recycling in the next step?
Running Entry
In 2019, Jeffrey Brian Straubel, former Tesla co-founder and CTO
decided to quit his job at Tesla to focus on a mysterious and complex business — breaking down discarded batteries.
The battery expert was motivated by the market’s disregard for used power batteries at the time. In Straubel’s view, unlike cell phones, half-ton power batteries could not just sit unused in a junk drawer after a new energy vehicle was scrapped. And at the time, there were no plans to process these power cells.
He realized that within the next five years, early electric vehicles would begin to be phased out in large numbers, which would then set off a tsunami. So, in 2017, Straubel founded Redwood Materials to get into the battery recycling business. Two years later, Straubel announced his departure from Tesla and began to focus on the battery recycling business.
Once founded, Redwood Materials quickly gained the attention of investors. Since 2017, Straubel and his team have raised nearly $800 million, bringing the company’s valuation to approximately $3.7 billion.
Among Redwood Materials’ customers are Giga Factory, Panasonic’s super battery plant with Tesla, and Vision Power’s battery plant in Tennessee, U.S. Redwood Materials also works with Amazon to recycle electric vehicles and other lithium-ion batteries and e-waste from some of their operations.
Straubel is not the only one who sees such a highly utilized, high-potential value industry. In the years that Redwood Materials has been growing, the global power battery recycling industry has also grown.
Starting in late 2020, driven by demand for lithium battery cathode materials, upstream metal prices have entered an upward trajectory and generally seen large increases, resulting in high costs for power batteries. At the same time, according to the life of new energy vehicles 5-8 years (3-5 years for operating vehicles), the first batch of new energy vehicles gradually enters the stage of large-scale power battery retirement, and the power battery recycling market initially forms a scale.
The fierce upstream price of raw materials has pushed up the price of the used battery recycling market, coupled with the huge retention of new energy vehicles brought by explosive development in recent years, the power battery recycling industry quickly from the early unattended to become the “meat and potatoes” that everyone scrambles for.
In China’s market, which has been the world’s top seller of new energy vehicles for seven consecutive years, power battery recycling is expected to become a “new blue ocean” of hundreds of billions of dollars.
According to the China Automotive Technology Research Center, in 2021, China’s total accumulated power battery decommissioning is about 320,000 tons, an increase of 60%. By 2025, this figure will rise to about 780,000 tons. The massive retirement tide of power batteries will give rise to a 100 billion power battery recycling market.
In the face of the huge market capacity, many players are running to enter. Enterprise data show that from 2017 to 2021, the number of new power battery recycling enterprises in China is 1196, 1424, 1883, 3840 and 24,900. In the first eight months of this year, the number of new power battery recycling enterprises in China is close to 30,000.
Especially since the second half of 2021, CATL, Tianshi materials, Greenmax, and other head companies accelerated the entry, more powerful battery recycling track added a fire.
Among them, according to the different roles in the upstream and downstream of the industry chain, players in the power battery recycling market can be divided into four categories: one is the vehicle enterprises represented by BYD, Azera, Dongfeng Motor, etc.; the second is the battery enterprises represented by CATL, AVIC Lithium, etc.; the third is the raw material production enterprises represented by Huayou Cobalt, Xiamen Tungsten, etc.; the fourth is the third-party enterprises represented by Greenmax, etc.
A noteworthy detail is that, with the development of the power battery recycling industry, the trend of cooperation between upstream and downstream enterprises in the industry chain has gradually deepened. Vehicle manufacturers, power battery manufacturers and raw material manufacturers have laid out the battery recycling business, mainly through equity participation/holding third-party recycling enterprises (including laddering and recycling enterprises), strategic cooperation with upstream and downstream enterprises in the industry chain and direct layout.
In this way, upstream and downstream enterprises can form industry barriers through business extension, which can reduce the cost of power batteries to a certain extent; by connecting upstream and downstream of the industry chain, they can guarantee the supply of raw materials such as cobalt salt and form a closed loop of power battery supply chain.
Taking CATL as an example, in 2015, CATL acquired Bump Cycle, a waste battery recycling company, to enter the battery recycling business; in 2018, CATL reached strategic cooperation with SAIC Group to jointly promote the recycling and reuse of new energy vehicle power batteries. Wu Kai, the chief scientist of CATL, recently said that Bump Cycle has built 221 battery recycling outlets and will account for 50% of the nationwide recycling of waste power battery resources in 2021.
It is worth mentioning that a few days ago, the Ministry of Industry and Information Technology to be announced in line with the “comprehensive utilization of new energy vehicles waste power battery industry specification conditions” list of enterprises (the fourth batch) for public comment, this batch of “white list” of enterprises totaling 41.
If the public announcement is approved, plus the previously released three batches of lists, the domestic power battery recycling “white list” enterprises will exceed 80, power battery recycling industry is expected to accelerate into a new phase of competition between the regular army.
Pain points to be broken
Despite a large number of entrants, at present, the industry mainly chooses two ways to recycle power batteries: gradual utilization and disassembly and recycling.
The retired batteries with high residual capacity can follow the principle of secondary utilization and continue to be used in energy storage and low-speed electric vehicles. For example, BAK Battery and Southern Power Grid have cooperated to build a 7.27MWh user-side energy storage system with retired ternary power batteries, which adopt the whole pack application scheme.
As for the waste batteries that do not meet the criteria for secondary use, they can be disassembled, crushed and screened following the principle of disassembly and recycling, to extract the core raw materials such as nickel, cobalt and lithium in power batteries and use them again for power battery production.
Everbright Securities expects that in 2022, the recycling volume of lithium, nickel, cobalt and manganese in ternary lithium batteries will reach 0.22 million tons, 0.80 million tons, 0.47 million tons and 0.53 million tons respectively, and predicts that these figures will double in 2025.
Zeng Yuqun, chairman of CATL, also said that the recovery rate of nickel, cobalt and manganese of CATL has reached 99.3%, and the recovery rate of lithium has reached over 90%. He predicted that by 2035, the battery materials obtained through recycling can meet the majority of market demand.
It is a recognized fact in the industry that the power battery recycling industry has good business prospects and social value, but in China, power battery recycling is still in its infancy.
Wang Zhenpo, professor of the Beijing Institute of Technology and director of the National Engineering Research Center for Electric Vehicles, said that at present, there are still many pain points to be broken in power battery recycling.
For example, there is information asymmetry in the upstream and downstream of the industry chain, including the difficulty of immediate access to decommissioning information, the difficulty of recycling by comprehensive utilization enterprises, and the lack of transparent transaction price information; the urgent need for breakthroughs in gradient utilization technology, including the difficulty of battery health state assessment, low efficiency of retired battery testing, and the lack of consistency testing system; and the need to upgrade automatic technology and equipment, including low battery compatibility, low level of intelligence, and low green capacity.
Take the difficulty of recycling as an example, at present, informal recycling channels and non-compliant recycling means disrupt the order of the industry. There are still recycling “small workshops” in the industry, with outdated technology and equipment, no relevant qualifications, safety hazards and serious environmental problems. Compared with the compliant enterprises, these “small workshops” have low recycling costs and grab retired power battery resources through high prices, making it difficult for regular third-party recycling enterprises to obtain most of the actual retired battery resources.
According to GaoGong Lithium data, from 2018 to 2020, the “white list” enterprises only recovered less than 20% of the retired batteries. “Personal estimates show that 90% of used power batteries will go to small workshops by 2021.” In a media interview, Yu Qingjiao, secretary general of Zhongguancun New Battery Technology Innovation Alliance, said.
Accelerated standardization
In fact, since 2016, power battery recycling policies have been intensively introduced and entered a comprehensive pilot phase. Numerous signs show that the power battery recycling industry’s standardization process gears up to accelerate.
On the one hand, in recent years, “new energy vehicle power battery recycling management interim measures” “new energy vehicle power battery gradient utilization management measures” and other policies have been released one after another, the comprehensive utilization of waste power battery industry standardized management on the ground, to promote the construction of power battery recycling system to further improve; on the other hand, the industry has explored the formation of “gradient battery to rent instead of a sale, On the other hand, the industry has explored the formation of a number of new business models such as “leasing for sale of ladder batteries” and “scrap for raw materials” to promote the formation of a commercial closed loop for power battery recycling.
In this process, the car hundred think that there are four paths worth learning.
First, the recycling demand is integrated into the battery product design. Strengthen the cooperation of power battery enterprises, vehicle enterprises, gradual utilization enterprises and recycling enterprises and other subjects, jointly develop and explore the integration of gradual and recycling needs into the power battery R&D and production stage, and launch products with industry demonstration.
Second, promote the standardized recycling network construction. Explore the model of the shared recycling service system of industry chain enterprises, improve the responsibility attribution and management system, promote the standardization of recycling network construction, improve the utilization rate of the network, share the cost of network construction, and ensure that industry chain enterprises can optimize resource allocation in each region.
Third, improve the transportation efficiency of retired batteries. Through the cooperation and practice of power battery enterprises, recycling enterprises and logistics and transportation enterprises, explore the best solution for transporting retired batteries, improve transport efficiency and reduce transport costs, and promote the formation of relevant industry standards.
Fourthly, innovative cooperation mode. Set up an operation center in a certain region, which will be jointly funded by all power battery recycling practitioners and the government, and provide basic common services such as retired power battery recycling, logistics, storage, traceability, residual value assessment and dismantling. It can save cost investment and promote the construction of relevant standards in the power battery recycling industry without affecting the economic benefits created by enterprises playing their respective advantages in the stage of gradual utilization and material recycling.
With the development of smart electric vehicles, China will become an important new center in the transformation of the automotive supply chain from the perspective of global layout. And whether from the perspective of alleviating the high dependence of power batteries on upstream resources, or from the perspective of low-carbon development and environmental protection, power battery recycling is an important and indispensable part of the industry chain.
Improve access mechanisms, promote system construction, explore business models …… keep the last link of the whole life cycle of the power battery, and new energy vehicles can really show the green undertones.
