Electric mobility use is soaring. According to recent analysis from Global Data, there are some five million electric vehicles (EVs) in service worldwide today (www.is.gd/ukaler). This compares with just two million in 2017. More significantly, forecasters predict that truly large-scale commercial production of EVs will not take off until 2025.
A similar analysis from the IEA observes that in freight transport, EVs were mostly deployed as light-commercial vehicles with some 250,000 units in service in 2018, up 80,000 from 2017 (www.is.gd/zogine). Around 1,000-2,000 medium truck sales also took place in 2018, mostly in China.
Indeed, the industrial and commercial EV sector is also expected to see rapid growth. In September for instance, Swedish vehicle maker Epiroc announced a swathe of orders for its new generation of battery electric mining equipment that was launched in 2018.
Finland, Australia and Canada are among the countries that are looking to acquire EV equipment, such as the Minetruck MT42 Battery (main image).
“We see very strong customer interest for our new battery electric mining machines. The technology is now well established, and more and more mining companies are realising the significant benefits that come with using electric machines instead of diesel,” says Helena Hedblom, Epiroc’s senior executive vice president for mining and infrastructure.
However, while Global Data notes that technological advancements are leading to substantial cuts in EV battery prices – largely as a result of the increased economies of scale created by a booming EV market – there is a major question hanging over how to manage the disposal of EV batteries at the end of their service life.
As Hauke Engel, a McKinsey partner based in Germany and who co-leads its global work on sustainability and climate change, explains: “OEMs are being forced to think about end of life batteries, because in most places, there is either regulation or there is talk about having regulation to force them to bear responsibility for the disposal of the battery.”
He adds: “Automotive manufacturers are already thinking about what to do, and given the toxicity of some of the materials in the current generation of batteries, disposal isn’t easy. Recycling and repurposing create additional value.”
SECOND LIFE SERVICE
Each time a chemical battery goes through a charge and discharge cycle, its performance is degraded. In applications such as EVs, this reduction in performance imposes a limited lifespan. However, EV batteries do retain a considerable residual performance and can be repurposed in other less-demanding applications.
In November, for example, bus manufacturer Irizar announced a collaboration deal with charging infrastructure group Ibil that will see ‘end-of-life’ EV batteries used in stationary grid-connected electricity storage systems (www.is.gd/uburif). The batteries, which are produced by Irizar, together with their power electronics, will be reused as storage elements in the EV charging stations that Ibil is deploying in service stations, owned by one of its parent companies Repsol.
According to Irizar, urban electric bus batteries have a useful life of around 15 years in vehicles, but will be subsequently used to stabilise energy demand when EVs are charged at high-power, bringing down both operational and infrastructure costs.
This idea has been explored by other major automotive manufacturers. For instance, late last year, Volvo announced a similar initiative with the inauguration of a project that uses 14 end-of-life bus batteries to store 200 kWh of solar power. Part of a research project between Volvo Buses, Göteborg Energi, Riksbyggen’s Viva housing cooperative in Gothenburg and Johanneberg Science Park, the storage capacity is used to support apartment blocks that have their solar PV electricity production.
While repurposing used batteries is one solution, recycling the constituent materials is another option for end-of-life batteries that is also attracting considerable commercial attention. Belmont Trading UK’s Kilwinning Plant in Scotland, for example, has made major investments in increasing its capacity to recycle vehicle batteries (www.is.gd/iyexaj).
Indeed, a Lux Research analysis from late 2016 concluded that recycling, rather than reuse, is likely to be the more attractive option for up to 65 GWh of second-life batteries that are expected to appear of the market by 2035, as first-generation EV batteries reach the end of their service life (www.is.gd/nazera). “With present technology, recycling old batteries for new materials is the more economical option for creating the most value from existing materials,” notes Christopher Robinson, Lux Research associate and lead author of the report. Nonetheless, Robinson also notes the potential for disruptive technology that could potentially tip the economic balance.
RECYCLING VS REUSE
Responding to the strong growth of the market, Eramet, BASF and SUEZ have formed a partnership to develop a closed-loop process to recycle lithium-ion batteries. The two-year Recycling Li-ion batteries for electric Vehicles (ReLieVe) project is due to commence from January 2020.
As a leading cathode active material (CAM) supplier to battery producers for EVs, BASF believes recycling will play an increasingly important role in the roll-out of electromobility as an important long-term market requirement in the EV market. Even so, BASF acknowledges that the economics of recycling are challenging and could become more so.
As Daniel Schönfelder, VP for BASF Battery Materials Europe, observes: “As EV batteries develop, cell producers and battery manufacturers will attempt to reduce the mass of valuable metals, such as cobalt in the battery, to keep costs down. This means that in coming years recyclers could see a decrease in revenue per battery as their content becomes less valuable.”
Schönfelder adds: “Current recycling technologies extract the most valuable metals but destroy much of the remaining battery, including lithium. Recyclers are experimenting with new chemical processes [that] could potentially extract all valuable metals from the batteries but are too expensive today and not yet commercially viable”.
This economic uncertainty is a point picked by McKinsey’s Engel: “When it then comes to the question of repurposing or recycling, the jury is still out. There’s uncertainty around the cost and value evolution of either path.
“If you look at recycling, right now we haven’t yet got the full recycling value chain scaled up. The volumes aren’t there and there’s uncertainty about to what extent recycling costs would come down as the volume scales up. There’s also uncertainty around the extent that there actually will be demand for the materials recycled from the current generation of batteries in 10 years’ time. Assuming battery life is around 10 years, are we actually going to build batteries with today’s chemistry and hence use the same materials?”
Turning to repurposing, Engel also picks up on economic uncertainties facing an emerging market, while the costs of new batteries are still plunging. “Assuming you get a second life battery basically for free, you still need to refurbish it, performance test and package it into a new larger battery pack. You also need to pay for the aggregation of the end-of-life vehicles, extracting the batteries and so on. There’s some costs involved.At the same time, the cost of new batteries has come down dramatically, and will continue to do so. It is conceivable that in 10 years’ time we find that new batteries are actually more cost-effective than refurbished second-life batteries from a price performance standpoint.”
Ultimately the end-of-life battery is a growing challenge for vehicle OEMs, which will be forced to address the issue one way or another. But as Engel concludes: “There’s going to be value creation somewhere. The battery is a large share of the total cost of the vehicle, so if the OEM can effectively reduce that, because they get some value out of it at the end of its life, then part of that value will get passed on to the consumer through lower prices. It’s probably more a story of opportunity than risk.”