Mass production of waste batteries by 2040, EU battery law implemented… Bright outlook for recycling and waste battery testing equipment

42.27 million electric vehicles are expected to reach the end of their lifespan by 2040… Used battery market expected to reach 600 trillion by 2050
Various players emerge in transportation, dismantling, separation, etc.… Growth potential of derivative industries such as test equipment expected

index
1) Great value in escaping dependence on environmental friendliness and overseas key minerals
2) Electric vehicle popularity ↓… Outlook for the used battery market
3) Current status of Korean used battery industry players and technologies
4) LFP batteries should also be recycled… Monetary value alone should not be considered
5) The path forward for the used battery industry

[Editor's Note] The number of electric vehicles scrapped is expected to exceed 40 million by 2040, and battery recycling technology, which accounts for approximately 30% of the electric vehicle's life cycle carbon footprint and more than 30% of the electric vehicle's price, is considered a very important technology in the economic sector. If used batteries are not reused or recycled, waste will continue to increase, and if they are left untreated or buried or incinerated, hazardous substances may be generated, causing environmental pollution. The market size for recycling used batteries is expected to continue to expand in response to the trend of having to respond to CRMA in Europe and IRA in the US, which place great importance on eco-friendliness. We will take a closer look at the used battery industry, which encompasses both economic feasibility and eco-friendliness, and cover the current status of technology and business of Korean companies as well as the industry outlook in articles every Wednesday starting April 24 for five weeks.

The used battery industry has emerged as a solution to cope with the explosive increase in waste batteries, Europe's radical mandatory policy to use recycled battery raw materials, and the crisis caused by the supply chain. The outlook for derivative industries such as waste battery transportation and testing equipment is also bright.

SNE Research estimates that the number of electric vehicles (PHEV/BEV) reaching the end of their lifespan in 2040 will be approximately 42.27 million, and the scale of waste batteries generated as a result will reach 3,339 GWh in 2040. The industry is proposing reuse and recycling of waste batteries as a countermeasure.

The global used battery market size is expected to increase from approximately KRW 70 trillion in 2030 to approximately KRW 600 trillion in 2050.

This is because the number of used electric vehicle batteries is expected to explode after 2030, and Europe's environmentally friendly policies related to waste batteries are intertwined.

George Hye Cho, a senior researcher at the Korea Institute of Environmental Research, said, “As the new EU Ecodesign Regulation (ESPR) was adopted at the plenary session of the European Parliament on April 23, 2024, product environmental regulations and policies are being strengthened to ensure that products that consider circular economy factors such as product durability, ease of repair, and reuse/recycling secure global market competitiveness. This can also contribute to creating added value by establishing a battery circular economy system.”

In Europe, where environmental awareness is high, a radical policy regarding used batteries has been introduced.

Last February, the EU Battery Law came into effect, mandating that batteries contain a certain percentage of recycled materials from 2031.
/> The EU has set recycling ratios of 6% for nickel, 16% for cobalt, and 6% for lithium as its 2031 recycling target for used batteries.

By 2036, the standards will be further strengthened to 15% nickel, 26% cobalt, 85% lead, and 12% lithium.

Due to this bill, companies wishing to export electric vehicles to Europe will have to secure recycling technology and raw materials to match the ratio, regardless of battery type, such as LFP or NCM, and the economic effects they will bring are also expected to be very large.

The used battery industry is not only economically viable as a simple product, but it also seems to help reduce some of the risks from supply chain and mineral price volatility, and also help generate stable profits.

Our country relies on overseas imports for 95% of its mineral demand, and as of 2021, our country's dependence on imports of secondary battery cathode materials reached 89%.

The minerals that go into batteries are finite and ubiquitous.

In an international situation where the future is uncertain, such as the risk of nickel price volatility due to the war between Russia and Ukraine last year, ubiquity and high dependence on foreign countries could pose a major crisis to the battery industry.

LG Energy Solution announced that its operating profit for the first quarter of 2024 was 157.3 billion won, a 53.5% decrease from the previous year.

LG Energy Solution Vice President Lee Chang-sil also announced in a press release that “profits and losses decreased compared to the previous quarter due to increased fixed cost burdens such as adjustments in operating rates due to a decrease in market demand and the lag effect in raw material input caused by falling metal prices.”

It is interpreted that the operating profit of the world's leading battery manufacturers may also be affected by the decline in metal prices, and securing raw materials through recycling, etc., can have a small impact on the profits of manufacturing companies. It seems like it could instill a sense of stability.

In his report on the “Battery Aftermarket” last December, Ahn Hoe-soo, an analyst in charge of steel and metals/secondary battery materials at IBK Investment & Securities, said that with the emergence of various players in the used battery industry, including those in transportation, dismantling, and separation, the potential for growth in derivative industries is also high.

Among the costs of reuse and recycling projects, the second largest sector after scrap purchase price is transportation costs and labor costs.

▲Recycling plant (Image source: Ahn Hoe-soo, steel and metal/secondary battery materials analyst at IBK Investment & Securities, ‘Battery Aftermarket’ report)

When transporting used batteries, the batteries must be secured in a manner that prevents them from detaching or tipping over, and safety devices must also be installed to prevent fire.

This is also the reason why technologies and equipment that can safely transport batteries are featured at various battery-related exhibitions and events, such as InterBattery.

Disassembling the batteries after use was done manually for 2 to 3 hours.

This comes with time, manpower and safety issues, and also requires an understanding of the configuration of each electric vehicle and battery model.

A solution to automate this is expected to have very high economic value, and in Korea, a SIS company has attracted attention by being the first to develop a dedicated automation system.

Another market that is gaining attention in the used battery industry is battery testing equipment.

No return An analyst at IBK Investment & Securities analyzed that battery discharge and diagnosis equipment is essential equipment for companies that collect, disassemble, and preprocess used batteries, and that the equipment market size among small and medium-sized businesses in the battery reuse and recycling market is expected to be overwhelmingly large.

Battery testing equipment is also essential for testing remaining life in reuse and recycling projects.

The current standards that a business entity that is recognized as a circular resource and reuses and recycles waste batteries from electric vehicles must have are at least one set of equipment that can measure the remaining capacity (State of Charge) and remaining life (State of Health) of waste batteries, and at least one set of equipment that can discharge waste batteries from electric vehicles.

The Ministry of Trade, Industry and Energy's 'Reusable Battery Safety Inspection System', which allows only reusable batteries that have passed safety inspections since October of last year to be distributed and sold, has also been fully implemented, and since module-wide inspections have become mandatory for reuse, the future of the battery testing equipment market appears bright.

However, Son Jeong-su, a senior researcher at the Korea Institute of Geoscience and Mineral Resources, responded cautiously to the overvaluation of the industry in an interview with our newspaper, saying, “It is clear that battery recycling must be done, but it has not yet overcome the wall of ‘commercialization. ’” He added, “The recycling process and battery manufacturing process must be organically linked to become products in order to demonstrate true value.”

As the used battery industry grows, many Korean companies are also actively involved in securing and recycling used batteries and are also working hard to develop related equipment.

In the following article, we will learn about the companies leading our country's used battery industry and the state of technology.