Discuss your challenges with our solutions experts

For details on how your data is used and stored, see our Privacy Notice.

False dawn for lithium-ion battery recycling?

Li-ion recycling will have a limited impact on battery supply chain pressures to 2030

1 minute read

Electric vehicles (EVs) will rule the world’s roads by 2050 – that is not in doubt. But for those in the battery industry, pressures on the supply chain caused by this automotive overhaul remain a major concern.

Lithium-ion (Li-ion) batteries will inevitably be the workhorse for electrification. The difficulty surrounding sourcing sufficient volumes of critical battery materials like lithium, nickel and cobalt is something we’ve been discussing for some time. But can battery recycling delay the onset of supply imbalances set to occur later in the decade?

This insight, drawing on data from our Battery Raw Materials Service, looks into:

  • the issues recyclers will face by 2030
  • why EV battery recyclers are going too fast, too soon
  • and, ultimately, why the raw material supply chain will still heavily depend on a mining sector that will struggle to keep up.

The world electrified: the supply chain is struggling to keep pace with EVs

The transition to EVs is powered by the need to limit emissions from the transportation sector – a rare occasion where a drastic change to the status quo is almost universally called for. Vehicles are switching from explosions to electricity – combustion engines are giving way to energy storage technology – and the scale of growth will be enormous.

Underneath the surface of this electric future lies a relatively young supply chain struggling to keep up. The demand market can fluctuate over months – indeed Chinese new energy vehicle (NEV) sales have more than doubled from January to September this year. But expanding upstream and midstream to produce battery materials involves lead times of several years. As it is such a new industry, there is limited historic capacity to flip the switch on. Many see this as a ripe environment for recycling to make a tangible impact.

The world, particularly East Asia where the battery midstream is based, already has a fully functioning battery recycling industry. Phones, laptops and other portable electronics have been using Li-ion batteries for decades. With the demand for EV Li-ion batteries set to grow faster than electronics batteries did, and with much larger battery sizes involved, surely EV battery recycling can make a significant impact on the supply chain?

Recycling Li-ion batteries is inevitable – but not enticing

The Li-ion industry will certainly see recycling as an attractive option for material supply. All three major cathode types – LFP, NMC and NCA – contain lithium and two contain both nickel and cobalt. Since demand for Li-ion batteries puts these three commodities on a trajectory to virgin material deficit by 2030, cell manufacturers see recycling as an opportunity to delay or even prevent expected price surges.

Even this year these commodity prices have surged due to a material supply lagging the higher-than-anticipated EV sales – a taster of a supply deficit. Closing the loop in the supply chain is a natural deterrent to supply imbalance, but a culmination of factors will limit the impact of recycling.


Currently, battery recycling focuses on the portable electronics market. Recyclers benefit from technologies with an easily accessible battery – especially compared with EV batteries. EV-packs are too complex to disassemble into individual cells, so recyclers are left to discharge packs in conductive baths before mechanically shredding them into a mix of constituent materials. An average NMC 622 EV-pack contains only roughly 2% lithium, 11% nickel, and 4% cobalt. This leaves 83% of the shredded material that needs to be separated and scrapped for minimal return.

Another consideration is the value of the EV-pack cathode compared with portable electronics. The overwhelming majority of electronics batteries use an LCO cathode that contains 60% cobalt, while the NMC 622 cathode contains just 12% cobalt. While the lithium content is the same, the 36% nickel content is less valuable than cobalt and still doesn’t make up to the 60% mark. The EV battery is therefore less appealing to recycle per mass of the cell, let alone needing to process the whole pack.

Schematic of a typical Li-ion cell components – the cathode contains the critical battery materials lithium, nickel, and cobalt

Furthermore, the natural trend to lower-cost batteries disincentivises battery recycling as the value of recovered material is reduced. The economics of EV recycling is clearly tougher than portable electronics, which itself is not a booming business. Less than 15% of phones are currently recycled in Europe according to one recycling company. If this industry is not maximising its potential, how can EV recycling be any better?

One issue the industry faces is in the recycling processes.

Reclaiming Li-ion materials is not a simple process

There are three processes used to recover materials from Li-ion cells:

  • Pyrometallurgy, which uses heat to smelt metals, cannot recover lithium as it alloys with aluminium in the slag.
  • Direct recycling, in which recyclers recover whole cathodes for reuse, requires pre-sorting for specific batteries.
  • Hydrometallurgy, a process which leaches metals out of the cell, has the most promising recovery of lithium, nickel, and cobalt but uses strong acids.

Furthermore, the value of the recycled goods depends on the process. Direct recycling produces materials that can enter straight into cell production. Metals and salts from hydrometallurgy must be refined to stringent battery-grade quality and re-synthesised into cathode powder before entering the cell. The direct recycling process is more laboursome as cells must individually be disassembled and the product tends to have a lower performance than virgin cathode material.

An overview of the three current Li-ion battery recycling processes

This decade will see the supply chain further establish itself to supply vast quantities of battery-grade chemicals and cathodes to cell manufacturers, while recyclers will struggle with the large mass and complexity of EV-packs. Take the new cathode facility announced by Beijing Easpring and the Finnish Minerals Group as an example. The facility will produce 50 ktpa of NMC material, while a recycling facility will typically process 5-10 ktpa of e-waste. The former equates to roughly 400,000 battery EVs yearly and the latter takes in just roughly 30,000 EV-packs yearly.

It’s no surprise that legislation will be the main driver for the recycling industry. The EU recognises this and released its Batteries Regulation in 2020, stating that new batteries made in the EU from 2030 will require a minimum recycled content of 12% for cobalt and 4% for both lithium and nickel. Hardly an ambitious impact, but a realistic view on what’s possible.

Disregarding the economic factors, EV recycling still won’t be a solution for the eventual supply imbalance by the end of the decade.

The lack of recyclable feedstock will ultimately limit the sector’s impact on Li-ion battery material supply by 2030

Even though EV manufacturing is set to boom before 2030 the number of end of life (EoL) batteries available for recycling will remain limited. This is for two main reasons: EV penetration at the beginning of the decade is much lower than at the end, and EVs have an increasingly long lifespan.

For instance, EVs accounted for just under 7% of passenger car sales in 2020, and under our base case we expect penetration to reach 23% by 2030. Since recyclers use historical EV sales to feed current supply, a ramp in EV sales will always leave a feedstock lower than demand over our forecast horizon.

Secondly, the increasingly long lifespan of EVs results in a large disparity between EoL battery feedstock and new battery demand. As a lower limit, although automakers like Renault, VW and Tesla are currently selling EVs with an eight-year warranty, some are even predicting lifespans to reach up to 15 years. As a result, the boom in recycling feedstock will be over ten years after the boom in EV sales – which is just beginning this year.

Reuse will take feedstock from recyclers

EVs reaching EoL are not direct supply into recyclers. Often batteries are still usable well beyond their first life in the vehicle. Indeed, the aforementioned automakers include a warranty for EV Li-ion batteries to last until 70% capacity – still a significant amount. Large-scale energy storage systems, such as uninterruptable power supplies, don’t have the space and weight restrictions of vehicles. Used batteries are cheaper per kWh than pristine batteries and so a portion of EoL supply will likely be taken by the energy storage sector.

There’s also a growing demand from developing countries in South Asia and Africa for second- or third-life batteries. This further restricts supply to recyclers.

The batteries of 2030 will be different to today

The timeframe for a battery to reach the EoL will span a change in the battery landscape. This year we’ve already seen SVOLT commercialise cobalt-free NMX cells and Solid Power claims it will provide EV size solid-state batteries for Ford and BMW to test next year. Nickel- and cobalt-free LFP batteries are also seeing a resurgence this year and are expected to increasingly enter the European EV market after critical patents expire.

The natural direction for battery manufacturers is towards cheaper materials, leaving recyclers to increase the efficiency of their processes to maintain profit. Moreover, the introduction of new materials, such as solid-state electrolytes, will require recyclers to retrofit their processes.

The issues that recyclers face will result in limited supply of the critical metals for new EVs in 2030. Even with the EU legislated high metal recovery rates by 2030 – 95% for cobalt and nickel and 70% for lithium – the proportion of supply from recycling is dwarfed by demand.

Recyclers will compete for the limited supply

The lack of available secondary supply from recycling is evident – and yet the recycling sector is already scaling up quite aggressively. In our view, the total capacity of planned recycling facilities will still overshoot feedstock in 2030 when EoL EV numbers begin to ramp up.

The resulting supply imbalance will leave independent recyclers, especially in North America and Europe, in a scramble for used EV batteries. China, which has a mature and large re-use and refurbishment sector for portable electronics, benefits from proximity to the midstream. Chinese recyclers benefit from greater integration with nearby cathode production plants, so can regularly bid much higher prices for used batteries than their Western counterparts.

Even in the long term, the majority of spent EV batteries will end up back in East Asia where most cathode and precursor manufacturing occurs. Until North America and Europe have developed more integrated raw material supply chains, China will remain the most appealing location for battery recycling.

Meanwhile, additional hazards lie with those independent recyclers. Without long-term contracts with automakers or midstream manufacturers, they will compete for the scraps of batteries on the spot market.

The supply imbalance for critical battery materials is the greatest challenge to transport electrification but recycling won’t be a solution before 2030. Bullish expectations for Li-ion recycling may well lead to a rush of new entrants to the space. However, limitations on feedstocks mean that only the large and integrated will likely survive – ready to reap the rewards in later years.

Get closer to the detail with our Battery Raw Materials Service

The industry’s most complete solution in the lithium-ion value chain gives you a comprehensive overview of demand, supply, costs and prices for battery raw materials.

Stack of blue batteries