The need for immediate climate change solutions is driving exponential growth of the batteries that power electric vehicles (EVs). To reiterate our latest blog, the long lasting value in lithium-ion batteries provides an opportunity to integrate circularity at the verycore of society. But where is this circular value best captured – in reuse, repurposing or recycling?
To figure that out, Cling is developing a battery database that is covering all EV batteries on the roads. Specifically, it maps out which chemistries, cells and modules that are contained in which battery packs. It is quickly evolving to a battery data model we call “Chem2Pack”, but more on that later.
First, let’s break this down into who the sellers and buyers of batteries from used EV vehicles are and what they want. If not cited, the following points are based on our observations from tracking more than 300 car dismantlers in northern Europe and more than 40 repurposers and recyclers (Re-x companies) from 17 countries across Europe and beyond.
Supply (who sellers are and what they want)
- 35% of all end-of-life vehicles in Europe are lost to non-tracked activities. The other 65% end up at car dismantlers. If the batteries outlive the vehicles, that is where they will go too.
- The car dismantling business model is straightforward. Buy scrap vehicles and sell the spare parts for profit. The batteries, which make up the majority of the value in a used EV, are therefore sold as fast as possible to the highest bidder.
- The highest bidders are do-it-yourselfers “DIYs” who don’t need detailed diagnostics. Therefore, dismantling and diagnostic capabilities at dismantlers are still rare.
- Car dismantlers (the few that accept EVs) in Sweden have up to 28 different battery models, and counting. Most come from plugin hybrid electric vehicles (PHEVs).
- The DIYs still make up a significant number of the buyers and are influencing the market prices. Thus, the ask prices for used EV batteries range from 20 €/kWh to 3,000 €/kWh, illustrating the lack of functioning pricing mechanisms.
Demand (who the buyers are and what they want)
- Excluding long term storage and DIY projects, end-of-first-life batteries are either reused, repurposed or recycled.
- To reduce the risk of investing into re-x companies, they are striving to find reliable supply of homogenous batches of batteries. This means testing the batteries is becoming a prioritised process in sourcing.
- Buyers for repurposing tend to focus on a small selection of “high end” batteries, e.g., from Tesla, VW and BMW. Despite high energy density and C-rates, PHEV batteries are in low demand due to low unit capacity.
- Buyers for recycling tend to focus on batteries with high-cobalt (and increasingly high nickel) contents.
- Repurposing companies are building core IP into in-house BMS systems, as the BMS protocols from OEMS are unavailable. Hence, most buyers are looking for modules or cells.
- Logistics costs can make up 41% of total recycling costs on average, squeezing the acceptable costs for the used batteries. This includes the fact that it is the seller who should bear the costs of packaging, labelling, and the documentation for dangerous goods regulations.
Discussions on the prices of the critical materials that go into EV batteries are often based on an incomplete understanding of the market. Lithium, Nickel and Cobalt spot prices are the focus of commentary – particularly when the LME barely functions in the manner it is supposed to. The reality of supply agreements between mining companies and automotive OEMs and the long lead times of mine development give a more nuanced and even contradictory picture. Recent activity phasing out oil (and nickel) deliveries from Russia to Europe may complicate the situation even further.
Why the Chem2Pack model is helpful
We track 2,500 different EV batteries and as the industry is still developing (with no standardisation in sight), the variance of chemistries, cells and pack models are still increasing quickly. Kendall, Slattery, and Dunn characterise the cathode chemistries moving from NCA, LMO, and NMC 111 to NMC 811 and 622, and LFP in their recent report on Lithium-ion Car Battery Recycling for the California Environmental Protection Agency.
OEMs understandably would like to keep close control of data and IP that falls within the Chem2Pack flow we describe. That also includes the protocols to the Battery Management Systems (BMS) that govern the use of EV batteries. Until the OEMs are obligated to share more data thanks to the inbound European Battery Regulations, our Chem2Pack is fed with data gathered from various sources including in-field testing.
As many EV batteries share the same chemistries, cells and modules, the Chem2Pack shows buyers what range of batteries are fulfilling their criteria. Cling’s growing body of data aims to assist repurposers and recyclers looking to source batteries fast and at scale– helping to bridge a gap and mitigate the risks from lack of specialised knowledge.
We often like to characterise the end-of-first-life EV battery market as being highly influenced by entropy, defined as “the degree of disorder or uncertainty in a system”. What we mean is that EV batteries effectively disperse as vehicles first are sold and exported to second-third- and fourth-hand buyers and subsequently the vehicle ends up far away from the country of origin. There, the batteries are extracted and sold to the highest bidder. The extended producer responsibility proposed by EU legislation will be a major challenge for OEMs to comply with leaving room for many players to contribute. So, how can more contribute? By increased collaboration and a willingness to enter discussions with emerging players like Cling looking to use critical resources in a more sustainable manner; making sure each battery can go to where the most value and usage can be captured.
The Chem2Pack model is the core for what is then needed to develop a transparent and functional circularity with many contributors – a marketplace. Our next blog will go through how digital platforms enable greater efficiency and environmental benefits by addressing entropy and by consolidating a very fragmented market.
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