Driven by multiple factors such as the rapid development of new energy vehicles, the sharp increase in the price of upstream raw materials, and the latest EU Battery Act, the power battery recycling industry has begun to heat up this year, with capitals, car companies, and battery manufacturers gathering in the battery recycling field. The battery recycling companies have become the No. 1 target when it comes to cooperation.
According to the forecast of Tianfeng Securities, under neutral expectations, the size of China's power battery recycling market will reach 75.84 billion yuan by 2030. In an optimistic scenario, the total size of the power battery re-purposing + recycling market by 2030 is expected to reach 104.89 billion yuan. The 100-billion-scale market is booming, and the "junky" industry, which has never been taken seriously, will become a new blue ocean in the future.
20GWh of retired batteries per year and highly unbalanced resource layout
According to statistics from the Ministry of Public Security, as of the end of June this year, the number of new energy vehicles in China has exceeded 10 million units, reaching 10.01 million, of which 8.104 million units are pure electric vehicles, accounting for 80.93% of the total. The sales of new energy vehicles are still growing exponentially. Many believe that the sales of new energy passenger vehicles will exceed 6 million units this year.
The number of retired power batteries will also boom with the rapid growth and scaling of new energy vehicle market. According to the forecast data of the national traceability management platform, in the next 3-5 years, the number of retired power batteries in China will reach 20-30GWh per year, and 142GWh cumulatively by 2026. And according to the fact that ternary batteries have been the mainstream in the past few years, the number of retired ternary batteries will climb year by year.
As we all know, the biggest difference between new energy vehicles and fuel vehicles is the existence of power batteries, and power batteries are made of a number of metals and chemical substances, such as lithium, nickel, cobalt, manganese. If the power battery is not properly recycled, the power battery is likely to cause pollution to the atmosphere, soil, rivers and other environments. Therefore, at present, the power battery recycling has the significance of development.
In addition, the rise in upstream raw material prices since last year has also attracted attention from market players. In February this year, in the face of serious short supply of lithium resources, Xin Guobin, Vice Minister of the Ministry of Industry and Information Technology, said that on the one hand, it is necessary to strengthen resource protection, focus on meeting the production needs of power batteries and other sectors, and moderately accelerate the development progress of domestic lithium, nickel and other resources. On the other hand, it is key to improve the power battery recycling system, support technical research such as efficient dismantling and recycling, and continuously improve the recycling rate and resource utilisation efficiency.
It is worth noting that the development of power battery recycling also carries strategic significance in the long run. The reason is that the full electrification of automobiles will accompany the consumption of a large amount of mineral resources, among which the consumption of resources such as lithium, nickel and cobalt will be really significant. According to relevant statistics, at this stage, about 70% of the global lithium reserves are distributed in Chile and Australia, 75% of the nickel reserves are located in India, Pakistan and Australia, and more than half of the cobalt reserves are concentrated in the Congo. Although China is also developing relevant resources, its dependence on foreign countries is still relatively significant.
According to the forecast data of China Automobile Research Institute, it is expected that China will achieve full electrification of passenger cars by 2040, and full electrification of commercial vehicles by 2045. The peak sales of new energy vehicles are expected to be around 40 million units, which will also quickly boost the consumption of lithium and nickel. By 2035, the demand for lithium, nickel and cobalt from new energy vehicles in China will reach 720,000 mt, 440,000 mt and 53,000 mt respectively. If no countermeasures are taken, the development of new energy vehicles in China will be weighed on by the short supply of lithium and cobalt resources. Despite abundant foreign reserves, the electrification trend throughout the world will peak as well. If China is still highly dependent on imports, it will face political and geopolitical risks.
Recycling and dismantling are both difficult, and the industrial development is still in its infancy
Although the prospect is a billion-yuan worth, and many companies are vying to enter the market, the power battery recycling industry is far from mature. “It is still very early for power battery recycling to mature, and we are still in a relatively early stage of the industry." said Zhang Yuping, vice president of GEM, said at the 2022 World New Energy Vehicle Conference a few days ago.
It is understood that China's power battery scrap has entered a period of rapid growth since 2018 and 2019. In 2020, the cumulative retired power batteries reached 25GWh (about 200,000 mt), and it is expected to reach 116GWh (1 million mt) by 2025.
According to the analysis by Wei Honglian, chief engineer of the Solid Waste and Chemicals Management Technology Center of the Ministry of Ecology and Environment, although China's power battery recycling has undergone a period of development, the current amount of power battery scrap recycling through approved channels is still relatively low. The market is concentrated in Shenzhen, Hefei, Beijing and other cities with greater promotion efforts of new energy vehicles. At the same time, the recycling of power batteries is mainly powered by power battery scraps generated through R&D tests and manufacturing, and there are very few retired batteries that are actually recycled from new energy vehicles.
The reason is the difficulty of collecting power battery scrap in the first place. In 2021, the Ministry of Industry and Information Technology and other departments issued the Administrative Measures for the Re-use of New Energy Vehicle Power Batteries, which clearly stipulated the extended producer responsibility system and that automobile manufacturers should assume the main responsibility for power battery scrap collecting.
Data shows that at present, new energy vehicle manufacturers across the country have set up 13,000+ power battery collection service outlets in 31 provinces (cities), and these outlets are located adjacent to 4S stores. Industry analysts believe that these car companies may have relatively complete recycling path, but most of them have not yet put it into real practice.
In addition to the difficulty of collecting scrap, the current power battery recycling industry also has the problem of dismantling. “If the front-end battery manufacturer has developed too many battery packs like CTC and CTP with the purpose of how to make the battery firm and create a reliable shield, then for the recycling and dismantling enterprises, the top priority is how to use a sharper spear to crack the battery pack, to increase the recycling efficiency.” Zhang said a few days ago that the current diversified battery structures have made battery recycling and dismantling more difficult. And in this case, the difficulty and cost of intelligently dismantling are also relatively high.
In addition to the difficulty of collecting and dismantling, the recycling industry is also faced with other dilemmas like re-purposing, efficient recycling as well as safety and environmental protection management, in Zhang's view. He believes that the full life cycle value chain of power battery recycling is not the responsibility of battery recycling companies alone, but also calls for the deep engagement of the upstream and downstream of the industrial chain to form a cooperative ecosystem for common development.
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