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Battery recycling

The economics of a multi-billion Euro circular economy in the making
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By 2040, over 1 billion tons of EoL batteries will require recycling

As electric vehicle (EV) adoption surges, managing end-of-life (EoL) lithium-ion (Li-ion) batteries is a growing challenge. By 2040, over 1 billion tons of EoL batteries will require recycling, making sustainability, cost efficiency, and regulatory compliance key concerns for Original Equipment Manufacturers (OEMs).

The EU Battery Regulation’s Extended Producer Responsibility (EPR) already impacts OEMs, requiring them to allocate financial reserves for future EV battery recycling costs. Early preparation is crucial to minimize risks and optimize returns.

By integrating data-driven decision-making, OEMs can turn compliance into a multi-billion Euro business opportunity while ensuring sustainable EV battery lifecycle management.

FEV’s CycleBat, an advanced forecasting and cost analysis tool, offers in-depth insights into:

 

  • Battery circularity and second-life applications
  • Cell chemistry choices and impact on recyclability
  • Cost breakdown for machines, labor, and processing
  • Future recycling demand and scaling strategies

CycleBat serves as a robust tool for assessing the complexities

To quantify the immediate and long-term financial and environmental impacts of design-for-circularity approaches on end-of-life (EoL) batteries, this study employs FEV’s CycleBat suite of forecasting and cost models. Developed through the amalgamation of insights from multiple projects across the entire battery value chain, CycleBat serves as a robust tool for assessing the complexities involved in battery design, usage, and disposal. CycleBat comprises two core components: the CycleBat Market and the CycleBat ValueChain, each addressing different aspects of the EoL battery scenario.

One of the critical objectives of this research is to elucidate the methodologies for calculating the projected EoL battery disposal cost and to illustrate the difference between an oversimplified approach and a more nuanced one enabled by FEV CycleBat.

Illustration: Oversimplified battery recycling cost estimation approach

We find this approach to be used in many cases where the topic of battery recycling still is an afterthought overall. The less companies know about the topic the more likely they typically are to treat the issue of battery recycling with too little care. A typical approach could therefore look like this:

  • Analyzing the battery capacities sold each year
  • Applying current gate fees for battery recycling
  • Projecting ten years into the future when the batteries are presumed to return for recycling

While straightforward, this method can severely misrepresent the cost of recycling by failing to account for variations in battery longevity, fluctuations in recycling costs and recycled material values, and other dynamic variables.

Illustration: Advanced battery recycling cost estimation approach

FEV’s CycleBat allows for a more nuanced methodology:

  • Analyzing the battery capacities sold each year
  • Employing “CycleBat Market” model to accurately predict the distribution of EoL batteries over time, recognizing that some batteries will reach EoL sooner, while many will last beyond 15 years
  • Using “CycleBat ValueChain” model to project the cost of recycling for each year’s predicted EoL battery disposal demand

By integrating predictive analytics into the equation, the CycleBat models provide a comprehensive and accurate assessment of future recycling costs. This approach leverages the temporal insights into EoL battery distribution and recycling costs to deliver a more accurate financial estimate.

Maximizing Value in EV Battery Recycling: Circular Design & Cost Efficiency

The shift toward circularity in end-of-life (EoL) battery management is a game-changer for the EV industry. Traditional cost projections estimate a staggering 14 billion euros in recycling costs by 2040, but advanced modeling using FEV’s CycleBat reveals a different picture—by optimizing battery design and lifecycle strategies, the industry could unlock a 25-billion-euro revenue opportunity instead.

Key innovations driving this transformation include:

  • Battery Cell Chemistry

    NMC batteries hold greater residual value than LFP, creating a 2,100€ per vehicle gap that impacts long-term profitability.

  • Battery Pack Design

    Modular designs improve repairability, recyclability, and resource efficiency, reducing waste and costs.

  • Vehicle-On-Board (VOB) Data

    Predictive analytics on battery health enhance remanufacturing and repurposing, minimizing unnecessary disposal.

  • Logistics Optimization

    A hub-and-spoke model can cut transportation costs by over 60%, making battery recycling more scalable.

By implementing these strategies, OEMs can turn regulatory challenges into profitable opportunities, ensuring both environmental and financial sustainability.

In conclusion, the study highlights the critical importance of integrating design-for-circularity principles into the development of EV batteries as well as the set-up of the overall European battery ecosystem. OEMs need to overcome short-term cost pressures and align their design decisions with long-term sustainability goals. By doing so, they can improve the financials of batteries already today, unlock new business opportunities in the future, mitigate risks, and contribute to a more sustainable and circular future for the electric mobility industry.

An abstract modern image about a pearl
An abstract modern image about a pearl
Battery recycling

The economics of a multi-billion Euro circular economy in the making

2024

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FEV Consulting Pfeil in Tealfarben
FEV Consulting Pfeil in Tealfarben

Optimize your EoL battery strategy with FEV’s CycleBat today.

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