Battery Recycling: A Potential Market in China?

The global auto market is not growing, in fact it is shrinking. Auto sales peaked in 2017 at nearly 86 million on a trailing-12-months basis; right now in 2019, sales are closer to 76 million (Bullard, 2019).

But electric vehicles (EV) is a growth market. China’s sales of “alternative energy vehicles” — mostly electric, with some hybrids and a small number of natural gas combustion engines — are nearly 1.5 million. The contrast between EV sales and all auto sales in China is shown as follows:

Source: Bloomberg

China has already begun owning the EV market. Albanese and Landess from BloombergNEF used Automaker EV Exposure Score analysis to evaluate the market players. The score weights electric passenger vehicle sales volumes, revenue, and current and future model count, then assigns greater value to pure electric as opposed to plug-in sales. From their analysis, of the top 10 automakers, nine are Chinese:

 Top 10 automakers by BloombergNEF electric passenger vehicle exposure score

Source: BloombergNEF

One of the issues brought by growing EV market is the transition to battery power will dramatically increase the thirst for raw materials, including copper, nickel and cobalt. For a country like China, it has to import large amounts of lithium every year, over 85% of the total is imported from foreign countries. The demand has pushed up prices almost fourfold in three years. Another issue is the environmental problem caused by Lithium-ion batteries. Lithium-ion batteries can be highly toxic if damaged. Extracting the lithium and materials needed to produce them can harm the surrounding environment (Akihide Anzai, 2019). But China is coming up with a solution — recycling.

China has benefited from around a decade of mobile phone manufacturing. This enabled it to perfect lithium-ion battery recycling as part of a growing handset refurbishing industry. Three out of four phones that are sent for refurbishing go to China, according to Hans Eric Melin, director of Circular Energy Storage Research.

Last September, Beijing issued its first set of industry guidelines for EV battery recycling, including a white list of five recycling companies. Among them is Shenzhen-based GEM. As one of the biggest battery recyclers in China, the company handles over 3 million tons of waste resources each year. The company produces 20% of the country's reclaimed cathode materials for lithium-ion batteries by volume.

The Chinese Government is targeting new-energy vehicle sales of 2 million in 2020 and 7 million in 2025. According to the China Automotive Technology and Research Center, the volume of used batteries in China will total between 120,000 tons and 200,000 tons in 2018-2020. And that figure will increase to 350,000 tons in 2025, according to local media. Given a growing number of used batteries, battery recycling is a potential market in China.

Reference:

1. Nathaniel Bullard, China Is Winning the Race to Dominate Electric Cars, Bloomberg

2. Akihide Anzai, China scrambles to tap EV battery recycling opportunity, Nikkei Asian Review

3. Jason Deign, How China Is Cornering the Lithium-Ion Cell Recycling Market, www.greentechmedia.com