As the U.S. looks to secure its critical mineral supply, a particular electric vehicle (EV) component has increasingly come into the spotlight: the battery. While critical minerals are required to produce other components of EVs, the battery requires larger amounts of these minerals, meaning that a mineral shortage could seriously hamper the Biden administration’s efforts to power their way toward the target of 50% of EV sale shares in the U.S. by 2030.
Lithium-ion batteries are the most common type of EV batteries used today and depend on five critical minerals whose domestic supply is limited: graphite, nickel, manganese, cobalt, and lithium. China possesses the highest global share in processing for graphite, lithium, and cobalt and the highest share in the production of graphite, leading to a global EV battery production capacity share that surpasses 70%. Given the sourcing challenges, one approach that has started to gain more attention is repurposing and reusing some of the critical minerals already in supply through battery recycling.
By 2027, it is estimated that 200,000 metric tons domestically and 800,000 metric tons globally of EV batteries will reach end of life (EOL), highlighting the need to boost recycling capabilities as a matter of waste management in addition to economic security. As fleet electrification charges ahead, fleet operators will need to consider their battery disposal practices.
Firms with access to vehicles and vehicle batteries, such as original equipment manufacturers (OEMs) and fleets, could potentially move downstream into recycling with the aid of public funding, providing the much-needed supply of batteries to the battery recycling market. OEMs could partner with fleets to gain access to old batteries to fuel their battery recycling business and secure key manufacturing components. Fleets, themselves, could also move into battery recycling to support fleet disposal and sell second-life batteries and/or components to OEMs, charging providers, and utilities.
Another key benefit of battery recycling is that using batteries that contain components recycled in the U.S. will allow vehicles to satisfy the $3,750 critical minerals tax credit even if the recycled components originally came from a different country.
Mineral recycling from EV batteries generally involves three steps: collection, separation, and extraction. Not all the key minerals for EV battery manufacturing can be feasibly extracted from other non-battery sources and depending on how the battery pack is designed, it may be very expensive to disassemble and process the battery. Therefore, not all existing battery recycling processes are economically viable, leading to an uptick in funding activities focused on battery recycling technologies and recycling facilities.
Funding that targets EV battery recycling will likely continue into 2024 across all vehicle classes at the federal and state level as electrifying transportation remains a major goal of the current administration and states continue to roll out their own electrification policies and goals. Some examples on the R&D side include the U.S. Department of Energy’s (DOE) Advanced Battery R&D Consortium and Electric Drive Vehicle Battery Recycling and 2nd Life Apps Program which funded 10 projects in 2022.
At the state level, the California Energy Commission (CEC) is soon expected to release information on its Lithium-ion Battery Reuse and Recycling Program. In addition to funding focused on R&D, the DOE is also providing $3 billion in battery manufacturing and recycling grants for manufacturing facilities. The agency also provided direct loans to Redwood Materials and Li-Cycle to support their battery recycling facilities through the Loan Program Office’s Advanced Transportation Financing.
Incentives for EV battery recycling R&D and facility development will need to maintain a steady pace to support the domestic mineral and battery component sourcing requirements. As states start to push back against the current administration’s emissions rules and with presidential election looming this November, it will be important to keep track of how policies and funding opportunities that support electrification may shift in the years to come.
