The recycling and reuse of power batteries has undoubtedly been a highly focused aspect of the new energy vehicle industry chain this year. Since I began researching and focusing on the new energy vehicle industry chain in 2009, the recycling and reuse of power batteries has been mentioned many times, but each time it was shelved due to various market issues. A prime example is that back in 2002, I was commissioned by the Japanese telecommunications operator NTT DoCoMo to study the reuse of power batteries for base station energy storage. However, due to the small market capacity for discarded power batteries, inconsistencies in battery quality, and other reasons, the study ultimately concluded that it was not the optimal time to implement reuse. However, since 2017, with the gradual increase in the number of discarded power batteries and the soaring prices of metals such as cobalt and lithium, a large number of domestic power battery recycling and reuse projects have begun to be implemented. This is evident from my experience providing feasibility studies for recycling and reuse projects to companies; many companies are now investing significant sums in power battery recycling and reuse projects.
The author believes that the development of any industry requires favorable timing, location, and human factors. For the power battery recycling and secondary utilization industry, it needs supportive industrial policies, sufficient market space, a clear profit model, feasible technological solutions, and a healthy market competition environment. In this article, the author will explore the power battery recycling and secondary utilization industry from these aspects.
First, as an industry in its early stages of development, policy support is essential. National policies and regulations for the power battery recycling industry are being continuously improved. At the level of standards and regulations, the National Standardization Management Committee, in conjunction with major industry players, has formulated detailed policies and guidelines for the lithium battery recycling industry, such as the "Specifications for Dismantling and Recycling of Vehicle Power Batteries" and the "Residual Energy Detection for Vehicle Power Batteries." In the future, more comprehensive and detailed guidelines will be developed for various aspects, including packaging and transportation, cascade utilization, discharge, dismantling, materials, and production conditions. At the policy level, the state has successively formulated numerous industrial policies, industry standards, and demonstration pilot projects related to power battery recycling to promote the development of the power battery recycling industry.
Although much work still needs to be done to improve policies and regulations regarding the recycling and reuse of power batteries, the government's encouraging attitude towards the industry is a crucial prerequisite for project implementation. This is evident in my experience helping local governments formulate industrial plans in recent years. Local governments have consistently included power battery recycling as a key development focus in their new energy industry plans, viewing it as an important growth point for the new energy and circular economy industries. They no longer harbor concerns about the environmental pollution associated with power battery recycling projects or worry about their failure to pass environmental impact assessments, as they did in the past.
Secondly, there is ample market space. This is undeniable for the power battery recycling and reuse industry. I have calculated the future market size of this industry in various settings and research projects. According to research data, the demand for power batteries from new energy vehicles will exceed 120 GWh in 2020 and exceed 210 GWh in 2022, with NCM ternary batteries accounting for over 70%. The average lifespan of a power battery (degrading to 80%) is about 4 years. Therefore, batteries installed in 2014 will face a wave of obsolescence after 2018. The theoretical recycling volume of power batteries in China will reach 257,000 tons in 2020 and 422,000 tons by 2021. With the gradual increase in the number of electric vehicles, the number of obsolete power batteries will continue to increase. Therefore, I believe that the problem of the number of used batteries that limited power battery recycling projects a few years ago will be gradually resolved, and economies of scale will gradually be reflected in new power battery projects.
Secondly, any project needs a clear profit model. Currently, the main methods for power battery recycling projects are dismantling and secondary utilization. Regarding the economic benefits of these two methods, the author has calculated them in several project feasibility studies. The calculations show that ternary lithium batteries, containing rare metals such as nickel, cobalt, and manganese, can theoretically generate approximately 42,900 yuan per ton (this figure varies with metal prices) through dismantling and extracting materials such as lithium, cobalt, nickel, manganese, copper, aluminum, graphite, and separators, making them economically feasible. However, lithium iron phosphate batteries, if dismantled, can only generate approximately 9,300 yuan per ton, which is insufficient to cover their recycling costs. Therefore, lithium iron phosphate batteries are more suitable for secondary utilization. In terms of market size, the overall market size for power battery recycling, dismantling, and secondary utilization in China will reach 6.68 billion yuan by 2020 and 13.1 billion yuan by 2022.
A comparative analysis of the market size of secondary use and recycling/dismantling reveals that the market size for secondary use is far larger than that for recycling/dismantling. This raises the question: does the secondary use market have sufficient capacity to absorb such a large volume of used batteries? To address this question, the author has calculated several potential application areas for used power batteries, primarily energy storage, low-speed electric vehicles, and electric bicycles. Regarding the energy storage market, forecasts indicate that by 2020, China's broad energy storage market will demand 14.1 GWh of lithium batteries, and by 2022, this demand will reach 20.6 GWh. For the low-speed electric vehicle market, China's production is projected to reach 3 million and 5 million units in 2020 and 2022 respectively. Under optimistic scenarios, the demand for lithium batteries from low-speed electric vehicles will reach 9.6 GWh and 28.0 GWh respectively. For the electric bicycle market, China's production is projected to reach 41 million units in 2020, of which over 11 million will be lithium-ion batteries, requiring 4.3 GWh of lithium batteries. Theoretically, these potential lithium-ion battery markets could utilize retired power batteries to reduce costs.
Regarding feasible technical solutions, the recycling and dismantling of power batteries mainly includes pre-processing steps such as discharging, dismantling, crushing, and sorting. Then, the positive and negative electrode materials and metal casing of the battery are separated, and valuable metal materials are obtained through specific recycling processes. Although I do not have a technical background, I have consulted with leading domestic and international experts during my years of research. I generally believe that the recycling and dismantling of power batteries faces no major technical obstacles. Dismantling technologies are relatively mature, primarily employing physical, chemical, and biological methods. Biological methods are in their early stages, while physical and chemical methods are relatively mature, and the recycling and dismantling processes are largely similar. Therefore, I tentatively conclude that the recycling and dismantling of power batteries faces no technical obstacles.
Finally, the development of the power battery recycling industry also requires a healthy competitive environment. Currently, the main players in the power battery recycling, dismantling, and reuse sectors include three categories: vehicle manufacturers, battery manufacturers, and specialized third-party companies. I firmly believe that the most crucial factor determining the success of battery recycling and reuse projects is distribution channels. Therefore, in the long run, the companies that truly succeed in the power battery recycling business will be those with a competitive advantage in recycling channels. Thus, in the short term, battery manufacturers and vehicle manufacturers have certain advantages in channels, but in the long run, the entities that can establish a robust battery recycling channel will undoubtedly be third-party recycling companies. Therefore, I am more optimistic about the competitive advantages of third-party recycling companies in the field of power battery recycling and utilization.
Although the power battery recycling and reuse industry still faces numerous challenges, for any industry, waiting for all uncertainties to become certain will prevent the emergence of good investment opportunities. Any investment opportunity arises from an accurate prediction of future uncertainties. Therefore, I boldly predict that the three years from 2018 to 2020 will be the investment period for power battery recycling projects, with real profitability expected after 2020.
