Business Trends in Battery Recycling and Reuse

Batteries are indispensable today, powering a vast array of essential devices and technologies, from portable gadgets like smartphones and laptops to critical medical equipment. Batteries are pivotal to reducing carbon emissions and combating climate change. They play a vital role in renewable energy systems, storing energy from solar panels and wind turbines to ensure a consistent and reliable power supply.

Sourcing raw materials for batteries is crucial, particularly in the European Union (EU) and United States (US), where they rely heavily on imports of essential raw materials. This poses significant risks and can create bottlenecks in high-demand markets such as electric vehicles (EVs).

Legislation and Regulation are Driving Change

The EU and US are actively pursuing initiatives to secure and sustain the supply of battery raw materials and promote their reuse. This will enhance the resilience of the battery raw material supply chain and reduce commercial vulnerabilities. In addition, reuse and recycling can effectively reduce the carbon footprint of batteries, as raw material mining and battery cell manufacturing are the largest contributors to CO₂ emissions over a battery’s life cycle.

 –  In May 2024, the EU adopted the Critical Raw Materials Act to ensure a diverse, secure, and sustainable supply of raw materials for the EU’s industries.

 –  The US Department of Energy Battery Manufacturing and Recycling Grants program aims to increase domestic production and recycling of critical materials like lithium, cobalt, and nickel.

 –  The US Inflation Reduction Act means that EVs that undergo final assembly in North America qualify for a tax credit if 40% of the critical materials in the batteries are sourced from the US or its free trade partners.

From February 2027, all EV and industrial batteries in the EU will need a unique battery passport to store data on the entire battery lifecycle: production, testing, and recycling. This will drive responsible reuse and recycling.

These initiatives have led to three significant new technology trends:

 1.  Recycling raw materials for batteries to enhance the supply of critical materials and remove upstream bottlenecks in battery manufacturing and supply.

 2.  Reusing EV batteries for second-life applications, such as stationary energy storage, to fully exploit the potential of batteries and reduce demand for new raw materials.

 3.  Implementing strategies to make reuse and recycling more efficient, starting from the battery design stage, tracking battery performance during operation, and monitoring end of life.

Battery Recycling Initiatives Gain Momentum

Battery recycling is regarded as a critical strategy to address resource scarcity, reduce environmental impact, and support the growing demand for batteries. Valuable materials such as lithium, cobalt, and nickel can be recovered from used batteries to create a more sustainable and resilient supply chain, minimize waste, and lower the carbon footprint associated with battery production and disposal.

Companies like Redwood Materials, American Battery Technology Company, Umicore, and Li-Cycle are leading the way in developing efficient recycling processes.

 –  All major battery chemistries can be recycled.

 –  Over 95% of the battery materials can be recovered.

 –  Recycling uses 80% less energy and water and produces 70% less CO₂ than mining raw materials.

These initiatives help to recover essential materials, reduce environmental impacts, and play a crucial role in building a circular economy for batteries, ensuring long-term sustainability and resource efficiency.

Second-Life Applications Maximize Battery Lifespan

When an EV lithium-ion battery reaches 80% of its state of health, it still retains about 80% of its capacity, but it is no longer suitable for general use in EVs and must be retired. This is a waste of resources.

Batteries can be:

 -> Refurbished—the packs are disassembled, and single battery cells are reconditioned and repacked in new modules.

 -> Repurposed—suitable packs are selected based on residual state and capacity and combined for new uses.

Maximizing the lifespan of batteries through second-life applications reduces the need for new raw materials, contributes to a more sustainable energy ecosystem, and helps mitigate the environmental impact of battery production and disposal.

The refurbished or repurposed EV batteries can be used for secondary applications in residential and commercial energy storage systems, balancing energy loads and supporting renewable energy integration.

BMW’s battery storage farm at its Leipzig plant in Germany uses used batteries from its i3 electric vehicles. This initiative repurposes up to 700 second-life EV batteries to create a 15 MWh storage system.

In parallel, on a strategy for “closed loop for battery cells,” BMW is establishing a Cell Recycling Competence Centre (CRCC) in Kirchroth, Bavaria. This facility will implement an innovative “direct recycling” process, which mechanically dismantles battery cells into valuable components like lithium, cobalt, graphite, nickel, and copper. These materials are then directly reused in battery cell production, bypassing energy-intensive chemical or thermal processing.

At Rome–Fiumicino International Airport, Enel X has created a 10 MWh energy storage system using second-life batteries from three different car manufacturers. It stores the excess power produced by a 30 MW solar photovoltaic plant powering the airport, which aims to become CO₂ neutral by 2030.

Finnish start-up Cactos developed Cactos One, a 100 kWh battery pack made with Tesla Model S batteries. The device features 50 kilowatts of charging and discharging power, and it’s controlled through a cloud system.

Connected Energy’s E-STOR storage unit can stash up to 360 kWh. Each one of their packs is made with 24-second life Renault EV batteries and comes in a 20ft container. Multiple E-STORs can be connected as required to scale up the capacity and meet the operator’s needs.

The Business Trends in Battery Recycling and Reuse

The future of batteries will be shaped by several factors, including technological advancements, regulatory changes, and market dynamics. NineSigma’s experience in the battery sector show these are the key trends to watch:

Increased Demand for Recycled Materials:

Growing adoption of EVs and renewable energy storage solutions will drive increased need for recycled battery materials.

Cost Reduction in Recycling:

As recycling technologies improve and scale up, the cost of recycling batteries will become more economically viable and attractive for businesses.

Advancements in Recycling Technologies:

Innovations in recycling technologies will enable higher recovery rates of valuable materials and reduce CO₂ outputs during recycling. This will help drive down the cost of recycled materials.

Growth of Second-Life Battery Market:

The market will expand significantly, and second-life batteries will find new applications in grid storage and backup power systems.

Standardized Testing and Certification for Reused Batteries:

Will ensure the safety and reliability of reused batteries, build consumer and industry confidence in second-life batteries, and facilitate wider adoption of reused batteries.

Reused Battery Integration with Renewable Energy Systems:

This will increase and provide cost-effective energy storage solutions, helping to balance supply and demand and stabilize the grid.

Collaboration and Partnerships Across the Supply Chain:

Increased collaboration between battery manufacturers, automakers, recyclers, and energy companies will facilitate knowledge sharing, drive innovation, and create efficient pathways for battery reuse and recycling.

New Players Will Enter This Space:

Energy companies for the oil, gas, and nuclear space are starting battery reuse projects. Mining companies have battery recycling initiatives. Expect more companies to see the opportunities and enter these areas.

Integration of Digital Technologies:

The integration of digital technologies, blockchain, and IoT will enhance traceability and transparency during recycling and reuse and ensure compliance with regulations and standards.

Regulations and Incentives Drive Recycling and Reuse:

Governments and regulatory bodies worldwide will implement stricter regulations and extended producer responsibility policies. Manufacturers will have to take greater responsibility for the end-of-life management of their products, creating a more robust recycling ecosystem. Tax benefits, subsidies, and grants for businesses will increase the repurposing and deployment of second-life batteries.

The next three years will see significant advancements in battery recycling and reuse driven by technological innovation, regulations, and market demand for sustainable energy solutions. Businesses that leverage these trends will be well-positioned to capitalize on the growing opportunities in the battery sector.

For more information, contact: ​europe@ninesigma.com

Written by Erika Biserni & Stephen Clulow