In recent years, the topic of "replacing a battery being more expensive than buying a new car" has been widely discussed in China's NEV sector. Many NEV owners have expressed concerns about battery lifespan on social media. The first batch of NEV owners who purchased pure EVs in China have successively shared their battery replacement bills, from early Tesla owners to recent Mercedes-Benz owners. These discussions have drawn widespread attention to the lifespan and residual value of NEV batteries. Since 2016, China has implemented an 8-year or 120,000-kilometer warranty standard for passenger car power batteries, and this year marks the eighth year. This means that starting this year, a certain number of power batteries will reach the end of their warranty period annually.
Currently, there are three main recycling models in the industry: led by power battery producers, automakers, or third-party companies. Each model has its advantages and disadvantages. Recycling led by battery producers facilitates targeted resource recycling of used batteries, automakers benefit from significant channel advantages that can lower overall recycling costs, while third-party companies can help maximize battery resource utilization.
According to a research report by the Development Research Center of the State Council, as of 2023, the standardized recycling rate of NEV power batteries in China is less than 25%. The power battery recycling industry has only issued over 10 national standards and 14 industry standards. Although there are numerous enterprise standards, their authority and versatility remain weak. Therefore, the development of the used power battery industry still faces challenges such as technical difficulties and inefficient recycling channels, which require improvements in laws, regulations, and standard systems.
Currently, end-of-life power batteries are mainly utilized in two ways: cascade utilization and regeneration. When the capacity of NEV batteries is between 20% and 80%, cascade utilization is the preferred option. This involves testing, classifying, disassembling, and reassembling the batteries for use in low-speed EVs, and later in energy storage, communication base stations, streetlights, or power banks. Once the battery capacity falls below 20%-30%, it no longer holds value for cascade utilization. At this stage, the batteries are regenerated through processes such as disassembly, crushing, sorting, and smelting to extract recyclable components like precious metals and plastics. However, the cascade utilization process is highly complex and requires technological advancements and new application scenarios to improve its economic viability. On the other hand, disassembly and recycling primarily generate profits from processing, with technology and channels being the core influencing factors.
From a channel perspective, power battery recycling mainly comes from the following sources: old cars from 4S shops, scrap cars from repair shops, accident cars from insurance companies, old cars from automakers, experimental batteries from automakers, and batteries awaiting disposal from electronics factories. Such diverse sources of batteries naturally pose challenges for one-stop recycling and processing. One of the biggest difficulties in cascade utilization of end-of-life batteries is ensuring "consistency." Many companies have stated that the goal of cascade utilization is to create products, but the wide variety of brands and models of batteries makes it challenging to standardize them into uniform products. Additionally, some unqualified companies profit from crude processing of old batteries, which not only creates safety hazards but also complicates traceability management.
Amid declining profitability and severe challenges in the power battery recycling industry, representative companies of the three recycling models are currently striving to achieve profitability through technological innovation and business model transformation. In the future, industry chain alliances involving deep collaboration across the upstream and downstream of the industry chain are expected to become the mainstream model for battery recycling.
