The average lifespan of a power battery is 5-8 years. Its performance degrades with each charging cycle. When the battery capacity drops below 80% of its rated capacity, it is no longer suitable for electric vehicles. However, retired batteries, after testing, maintenance, and remanufacturing, can still be reused in various fields such as energy storage, distributed photovoltaic power generation, household electricity, and low-speed electric vehicles. When batteries cannot be reused, they need to be recycled and dismantled for resource recovery.
Recently, favorable policies regarding the recycling of used new energy power batteries have been continuously introduced, leading to a more comprehensive policy and regulatory framework for power battery recycling. It is foreseeable that with the implementation of these new policies, more companies both within and outside the industry will begin to enter the power battery recycling business, with leading third-party companies holding a dominant position benefiting significantly. Consequently, the series of testing and certification processes for retired batteries—a crucial step in the recycling process—will also see a significant development opportunity.
The peak period for the scrapping of power lithium batteries is approaching.
According to the latest statistics from the "Power Battery PACK Industry Development Prospect Forecast and Investment Strategy Planning Analysis Report" released by the Qianzhan Industry Research Institute, based on a 3-year battery lifespan for commercial vehicles and a 5-year battery lifespan for passenger vehicles, and assuming a lithium battery recycling value of 0.3 yuan/Wh, the power lithium battery recycling market is projected to reach 14.03 GWh in 2018. The market will begin to take shape in 2018, with a theoretical scrapping volume of 37 GWh by 2020, resulting in a market size of 11.1 billion yuan. In terms of battery type, lithium iron phosphate batteries, with a larger stock, will be the first to enter their peak scrapping period.
The power battery recycling market is quite objective.
The sheer volume of discarded power batteries directly correlates to a massive recycling market. Driven by the persistently high volume of discarded batteries, the power battery recycling market is substantial. With the rapid growth in demand for power batteries, the market demand for lithium battery cathode materials is also continuously increasing. Expanding the utilization efficiency of renewable resources and recycling metals such as nickel, cobalt, manganese, and lithium from spent batteries to produce cathode materials is becoming increasingly economical. It is predicted that the domestic power battery recycling market will reach 63,900 tons in 2018 and 248,000 tons in 2020. This strong driving force of the recycling market will significantly boost the development of related testing services for the reuse of spent and retired batteries. As shown in the market trend chart above, we can foresee a surge in the development of related third-party testing services within the next two years, followed by a relatively stable competitive landscape after 2020. Therefore, current market positioning and business development become crucial. Below, we will continue to analyze the trends in the recycling market in detail.
Clearly, the recycling growth rate peaked in 2018, a natural consequence of the government's policy support and substantial subsidies for new energy vehicles over the past two years. As the first generation of power batteries is nearing the end of its lifespan, while the subsequent industrial chain has yet to mature, the "retirement" of this generation of "battery pioneers" is a crucial issue that the government needs to address, as it relates to the future development of the new energy sector.
Secondary use maximizes the value of batteries, extending their lifespan and reducing the total life-cycle cost. Power batteries go through four stages from manufacturing to disposal. First, battery performance degrades with each use. When performance drops to 80% of its original value, it no longer meets the standards for electric vehicles but can still be used in applications with lower performance requirements—this is the secondary use stage, such as energy storage systems and low-speed electric vehicles. Second, when battery performance further deteriorates to the point where it is unsuitable for secondary use, it enters the recycling and dismantling stage.
Multiple favorable policies have been continuously strengthened.
To facilitate the transition of waste power battery recycling from policy-driven to market-driven approaches, the Ministry of Industry and Information Technology (MIIT) recently announced the first batch of companies meeting the "Industry Standard Conditions for Comprehensive Utilization of Waste Power Batteries for New Energy Vehicles" and the "Interim Measures for the Administration of Industry Standard Announcements for Comprehensive Utilization of Waste Power Batteries for New Energy Vehicles." These companies are: Quzhou Huayou, Ganzhou Haopeng, GEM Co., Ltd., Hunan Bangpu, and Guanghua Technology. By focusing on key projects, addressing prominent bottlenecks, and guiding the support of financial institutions and social capital, the MIIT aims to ultimately consolidate momentum through policy, funding, and cooperation channels.
Commercialization of recycling is unimpeded, and third-party resource recycling companies have obvious advantages.
Currently, there are two main technical routes for recycling power lithium battery materials: dry metallurgy and hydrometallurgy. GEM Co., Ltd. currently uses the hydrometallurgical route and has achieved large-scale recycling and utilization of consumer-grade lithium batteries to extract metals such as cobalt and nickel. Once the recycling volume of power batteries can be increased, there are not many technical obstacles to realizing the recycling and utilization of power lithium batteries.
With the continuous rise in upstream raw material prices, battery manufacturers are facing increasing cost pressures, making the cascade utilization of power batteries to maximize resource utilization an inevitable trend. Although many problems still exist, with favorable policies and a broad market prospect, the cascade utilization of power batteries is not far from experiencing a market boom. Therefore, it is obvious that services related to the testing, maintenance, and remanufacturing of retired batteries will also develop accordingly, and related testing industries may benefit from this.
