Based on the lifecycle of new energy vehicles and the marketization process of new energy vehicles in my country, this year will mark the beginning of large-scale scrapping and recycling of new energy vehicle power batteries. The scrapping and recycling process of power batteries, whether for secondary use or as raw materials, requires the support of recycling entities. However, the current situation is far from ideal. On the one hand, there is a lack of dedicated power battery recycling entities, and relevant management has not been implemented in a timely manner; on the other hand, existing recycling companies are forced to seek other businesses due to insufficient revenue. What market challenges are power battery recycling entities facing? How should they develop in the future? A reporter from *China Automotive News* investigated this issue.
The main body for power battery recycling is not yet in place.
Although the peak period for the scrapping and recycling of power batteries has not yet arrived, the earliest demonstration vehicles have already entered the scrapping and recycling stage.
Based on the characteristics of power batteries and following the principle of recycling, my country currently advocates the principle of first utilizing retired power batteries in a tiered manner before scrapping and recycling them, and requires vehicle manufacturers to act as the main body responsible for power battery recycling. However, since most vehicle manufacturers are merely "assemblies" for electric vehicles, while batteries are supplied by specialized battery companies, a phenomenon has emerged where three types of entities coexist in power battery recycling: the first type is vehicle manufacturers; the second type is battery manufacturers; and the third type is power battery scrapping and recycling companies and raw material companies.
"Only when vehicle manufacturers take the lead can we ensure that all power batteries enter formal recycling channels and avoid ending up on the black market like lead-acid batteries." Qu Hancheng, general manager of Jiangxi Ganzhou Haopeng Technology Co., Ltd., a company at the end of the power battery recycling chain, believes that vehicle manufacturers must bear primary responsibility for ensuring that power batteries enter formal recycling channels, thereby improving their utilization efficiency throughout their entire life cycle. Currently, BAIC New Energy and BYD, as some of the earliest companies in my country to engage in the demonstration and promotion of new energy vehicles, have already taken action in power battery recycling.
"We have made many attempts in the recycling and reuse of retired power batteries. We have not only launched a battery swapping model, but also proposed the 'Optimus Prime Plan' to reuse retired power batteries in a tiered manner using photovoltaic and energy storage power stations. In addition, we have also established a dedicated power battery recycling company to recycle and reuse retired power batteries." A relevant person in charge of BAIC New Energy introduced in an interview with China Automotive News that as early as 2016, BAIC New Energy, together with the Xinxiang Battery Research Institute in Henan, established Beijing Jiangxin Battery Technology Co., Ltd. in Beijing, which is committed to the tiered utilization of power batteries, the development of new battery cell systems, and the exploration of new business models.
BYD has established power battery recycling points within its 4S stores. "We rely on BYD 4S stores to temporarily collect and store used power batteries, and then uniformly recycle them to BYD recycling points. Batteries in different states are recycled to the corresponding factories for processing. Among them, we define taxis as major customers, and there are special centralized points for maintenance and repairs. At the same time, the centralized points also have the responsibility of temporarily storing batteries," a BYD representative explained.
In addition to vehicle manufacturers, battery manufacturers have also actively explored this area. Companies such as CATL, CALB, BAK Battery, and Guoxuan High-Tech have established battery recycling networks, begun to develop power battery recycling businesses, and are carrying out tiered utilization or end-of-life recycling of recycled batteries.
In addition, independent battery recycling companies are also actively developing related businesses. Qu Hancheng explained that last year, their lithium battery recycling volume was 6,000 tons, including 200 tons of vehicle power batteries. Since the beginning of this year, with the expansion of the power battery recycling market, the business volume of recycling companies has also increased significantly. "Taking our company as an example, the business volume of Class B batteries (reused power batteries) in the first quarter of this year was almost the same as the total business volume of last year," Mr. Liu, a salesperson at a battery trading company in Shenzhen, told reporters. He explained that due to factors such as fluctuating market demand, the secondary use market for power batteries did indeed experience a small peak at the beginning of this year. "Our power battery processing volume in the first quarter was close to 100 tons, almost half of last year's business volume," Qu Hancheng also stated.
However, according to reporters, overall, the large-scale scrapping period for power batteries has not yet arrived, and the dismantling and recycling of power batteries is still difficult to achieve economies of scale. Most recycling entities are still operating below capacity. In addition, although various recycling entities exist in the market, their numbers are still a drop in the ocean compared to the total amount of scrapped power batteries that will soon enter the market. Overall, there is still a lack of recycling entities.
Management deficiencies led to the delayed acquisition of recycling qualifications.
Besides the lack of established recycling entities and the problem of insufficient business, the investigation also revealed that existing recycling entities face the awkward situation of lacking proper qualifications. While some existing recycling entities have begun to enter the power battery recycling business, they do not actually possess the necessary certifications to conduct this activity.
An investigation by China Automotive News revealed that, according to standard operating procedures, entities engaged in the recycling of end-of-life power batteries require approval from relevant departments, but no official list has been published yet. Companies such as GEM and Ganzhou Haopeng, which were interviewed by the reporter, have engaged in the recycling and processing of end-of-life power batteries, but they lack the necessary qualifications. Currently, their qualifications are only for lead-acid battery recycling and processing, not for power battery processing.
"As far as we know, the Ministry of Industry and Information Technology has not yet finalized the approval process for the qualifications of power battery recycling companies. The relevant companies have submitted their qualification applications for more than a year, but they have not yet been approved," a person in charge of a recycling company told a reporter from China Automotive News.
Meanwhile, it remains unclear whether companies engaged in the recycling (not scrapping) and secondary use of power batteries need specialized qualifications. However, in reality, vehicle manufacturers, battery producers, and battery trading companies are all involved in related businesses. "There's a saying that secondary battery recycling also requires qualification approval from the Ministry of Industry and Information Technology, but there are no clear regulations on what conditions need to be met or how to apply. There are still many blind spots in the field of power battery recycling, and most of the secondary use projects that have been implemented are pilot projects," the aforementioned person in charge told reporters. Zhang Jian, a senior researcher at the Research and Consulting Department of the China EV100, also stated in an interview with China Automotive News that there are indeed certain deficiencies in the management regulations for the scrapping and recycling of power batteries. The "Interim Measures for the Management of Recycling and Utilization of Power Batteries for New Energy Vehicles" stipulates relevant technologies and standards, but detailed implementation rules still need to be formulated.
Power battery recycling still needs to be coordinated
While economies of scale have not yet been achieved and management remains inadequate, the enthusiasm of various stakeholders remains undiminished. "The industry generally believes that by 2020, the recycling of end-of-life power batteries will definitely experience a period of large-scale growth," said Qu Hancheng. This is why, in addition to automakers, battery companies, and raw material recycling companies, capital is also pouring into this field, seeking new opportunities. In particular, some powerful companies are continuously expanding their industrial chains, extending downstream into the recycling and reuse of power batteries. However, despite the high level of external enthusiasm, from the perspective of the industry's own development, what model can more effectively promote the recycling and reuse of end-of-life power batteries still needs to be explored.
Experts have stated that, given the current development trend, collaboration may be the most effective model for the recycling of end-of-life power batteries, and it is also the model that various recycling entities are exploring. For example, BYD has built a recycling chain within its internal system: through its Baolong factory and cooperation with dealers, it completes the acquisition, testing, and reuse of retired power batteries. Then, through its Huizhou, Guangdong materials factory, it dismantles and recycles the waste battery materials. CATL, as early as 2015, acquired control of Guangdong Bangpu, whose main business is the dismantling of waste lithium batteries, through its subsidiary Ningde Hesheng, and incorporated it into its consolidation to carry out end-of-life power battery recycling business. GEM has built a city-centric power battery recycling and dismantling system, cooperating with more than 20 companies, including BYD and SAIC Volkswagen, to promote the construction of a power battery recycling industry chain. Dongfang Precision has also carried out strategic cooperation with BAIC Group, CATL, and others in the research, development, manufacturing, recycling, and cascade utilization of power batteries.
Yu Haijun, Vice President of BUP Group and General Manager of its Automotive Recycling Division, believes that most OEMs and battery manufacturers lack experience, professional capabilities, and specialized battery recycling equipment in the process of power battery recycling. "The power battery recycling industry is only a low-profit industry compared to the OEM and battery industries. Therefore, most OEMs and battery companies choose to cooperate with professional third-party recycling organizations like BUP for the professional recycling of used batteries." As Yu Haijun stated, the recycling of end-of-life power batteries still requires professional expertise. Currently, given that automakers are required to assume primary responsibility for the recycling of end-of-life power batteries, collaborative efforts from all parties are the better option.
Zhang Bin also stated that regardless of the type of recycling entity or operating model, further exploration of market-driven business models is necessary to ensure that the recycling of end-of-life power batteries enters a normal market-oriented development track. A representative from BAIC New Energy also stated that due to a lack of innovative business models, sustainable power battery recycling models are difficult to launch. The industry and enterprises need to conduct pilot projects of innovative business models based on technical and economic analysis and evaluation. After accumulating experience, replicating circular economy development models with promotional value can avoid a rush into the market.
