Massive waste battery generation expected by 2040, EU battery law implemented, bright prospects for recycling and waste battery testing equipment.

42.27 million electric vehicles are expected to reach the end of their lifespan by 2040, and the used battery market is projected to reach KRW 600 trillion by 2050.
A variety of players are emerging in transportation, dismantling, and separation, with growth potential expected in derivative industries such as testing equipment.

index
1) Great value in environmental friendliness and escaping dependence on foreign countries for key minerals.
2) Electric vehicle popularity ↓… What is the outlook for the used battery market?
3) Current status of players and technologies in the Korean used battery industry
4) LFP batteries must also be recycled… Monetary value alone should not be considered.
5) The future path 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 carbon footprint of an electric vehicle's entire life cycle and more than 30% of the electric vehicle's price, is considered a very important technology in terms of economic feasibility. If used batteries are not reused or recycled, waste will continue to increase. If they are left untreated, landfilled, or incinerated, they can generate hazardous substances and cause environmental pollution. Given the need to comply with environmentally friendly regulations like the CRMA in Europe and the IRA in the US, the market for used battery recycling is expected to continue expanding. This article will delve into the spent battery industry, which encompasses both economic feasibility and environmental friendliness, and cover the current state of technology and business of Korean companies, as well as the industry outlook, in five-week articles, published every Wednesday, starting April 24th.

The used battery industry has emerged as a solution to address the explosive growth in waste batteries, Europe's radical policy mandating the use of recycled battery materials, and the resulting supply chain crisis. The outlook for derivative industries, such as waste battery transportation and testing equipment, also appears 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 resulting waste batteries will amount to 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 due to the expected explosive growth in the supply of used electric vehicle batteries after 2030, coupled with Europe's environmentally friendly policies regarding waste batteries.

Jihye 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, environmental regulations and policies for products are being strengthened to ensure that products that consider circular economy factors such as durability, repairability, and ease of reuse/recycling can secure global market competitiveness. This can also contribute to creating added value by establishing a circular economy system for batteries.”

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 starting in 2031.
/> The EU has set recycling ratios for waste batteries at 6% for nickel, 16% for cobalt, and 6% for lithium for 2031.

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

This bill will require companies wishing to export electric vehicles to Europe to secure recycling technology and raw materials to meet the required ratios, regardless of battery type, including LFP and NCM. The economic impact of these efforts is also expected to be significant.

The used battery industry not only offers economic viability as a simple product, but also appears poised to mitigate some of the risks associated with supply chain and mineral price volatility, while also contributing to stable revenue generation.

South Korea relies on overseas imports for 95% of its mineral needs, and as of 2021, South Korea's import dependence on secondary battery cathode materials reached 89%.

The minerals that go into batteries are finite and ubiquitous.

In an international climate where the future is uncertain, such as the risk of nickel price volatility due to the war between Russia and Ukraine last year, the ubiquity and high dependence on foreign countries could pose a major crisis for 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 burden, such as adjustments to operating rates due to a decrease in market demand, and the lag effect of 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., has 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, metals, and secondary battery materials at IBK Investment & Securities, said that with the emergence of various players in the used battery industry, including those involved in transportation, dismantling, and separation, the potential for growth in derivative industries is also high.

Among the costs of reuse and recycling, the next largest costs after scrap purchase price are transportation costs and labor costs.

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

Transportation of used batteries must be done in a manner that prevents the batteries from detaching or tipping over, and must also include safety devices to prevent fire.

This is also why technologies and equipment for safely transporting batteries are featured at various battery-related exhibitions and events, including 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 developing the first dedicated automation system.

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

An Hoe-soo An analyst at IBK Investment & Securities analyzed that battery discharge and diagnostic equipment is essential 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 battery life in reuse and recycling projects.

The current standards that a business that is recognized as a circular resource and reuses and recycles waste batteries from electric vehicles must have include at least one piece of equipment that can measure the remaining capacity (State of Charge) and remaining life (State of Health) of waste batteries, and at least one piece 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 full module inspection has become mandatory for reuse, the future of the battery testing equipment market appears bright.

However, in an interview with our newspaper, Son Jeong-su, a senior researcher at the Korea Institute of Geoscience and Mineral Resources, said, “It is clear that battery recycling must be done, but it has not yet overcome the wall of ‘commercialization. ’” He also showed a cautious response to the industry’s overvaluation, saying, “The recycling process and the battery manufacturing process must be organically linked to be commercialized for it to show true value.”

As the used battery industry grows, many Korean companies are actively securing and recycling waste batteries and are also developing related equipment.

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