Factors impacting the development of a circular economy for EV batteries

Due to growing demand, by 2030 the global market for electric vehicles (EVs) is projected to reach USD 620,3 billion and over 50% of new vehicles sold globally are expected to be EVs. Naturally, the market for EV batteries will grow in parallel. However, this must not come with increased environmental risks; the shift to EVs only makes sense if it is accompanied by a shift to a circular economy for EVs, and critically, for EV batteries. 

Stakeholders across the EV battery value chain therefore must do their part to ensure that over time EV batteries have a lower carbon footprint; need less raw materials; and are collected, reused, and recycled to a higher degree. Let’s look at some key factors impacting these goals and ultimately the development of a circular economy for EV batteries.

A main factor influencing EV battery circularity is technological improvements, for example those that make batteries themselves more sustainable. A key development in this space is solid state batteries. These are more environmentally friendly than traditional lithium ion batteries since their lifespan is much longer, they contain less harmful materials, and they are easier to disassemble and recycle.

Batteries can also be made more sustainable by reducing the amount of virgin raw materials used to produce them. This is true of any product, but especially for EV batteries because some virgin materials used to make them, such as lithium and cobalt, are scarce and very expensive to mine within Europe. 

Battery and car manufacturers therefore want to keep these raw materials inside their local supply chains in what is called an ”inner loop,” To do this, they work with regional battery recyclers to put materials back into the production of new battery cells, though technology and infrastructure progress is needed to make regional battery recycling and production cost effective. 

Manufacturers can also reduce the use of virgin raw materials by reusing batteries in other applications. In the process, they can expand the lifecycle of the battery cell, spread their CO2 footprint over a longer time period, and capture new business opportunities. See below for more info about this.

Another factor which can alleviate issues around raw materials is material substitution. Much work is being done to find substitutes for cobalt and lithium. Candidates include nickel, manganese, aluminum, and sodium. These new chemistries are leading to easier access in Europe and improved cost effectiveness, and we should expect to see them playing an increasing role in the coming years.

Digital technologies can also support EV battery circularity. For example, AI can enhance processes used to track, collect, and distribute used EV batteries. Smart camera systems powered by AI can help identify and sort batteries during recycling. AI tools can also help monitor and track battery condition and performance, making it easier to determine when a battery needs to be replaced. Finally, AI can support the prediction of maintenance, helping improve safety and reduce downtime. 

Recycling technologies of course also play a major role in EV battery circularity. The highly valuable materials in EV batteries are recovered using either direct or indirect recycling. Direct recycling, which is still at the experimental level, involves regenerating a battery’s cathode material using various methods. 

Far more common, indirect recycling involves breaking down electrodes to recover the various constituents. This is done mechanically (using crushing or shredding), through pyrometallurgy (using heat), or through hydrometallurgy (using high-pressure water), the latter being the most popular method. 

One technological challenge of EV battery recycling is that methods like pyrometallurgy and hydrometallurgy are expensive. They’re also time-consuming and don’t recapture all of the valuable material inside batteries. That said, components like nickel and cobalt are valuable enough to make it worthwhile, and startups worldwide are rapidly developing cleaner, more efficient recycling techniques.

Better recycling techniques are just one way to improve EV battery recycling. Using design-for-recycling principles to maximize products’ inherent recyclability and make recycling cheaper can also help, as can infrastructure that ensures that used batteries actually get collected, such as deposit refund systems and accessible collection points. You can read more about the importance of EV battery recycling here.

A battery can typically no longer be used in an EV when it can only retain 80% of its original charge. While the battery could be recycled at this point, there are many opportunities to reuse batteries in other applications - and thereby boost circularity - before recycling them further down the road. 

These “second life” applications extend the life of EV batteries. They also offer sustainability benefits over putting batteries directly into resource- and energy-intensive recycling processes, by reducing EV battery waste, limiting the extraction of raw materials, and partly offsetting the indirect CO₂ emissions associated with EV battery production.

For example, a battery originally designed to power a car can be reused to store energy. Applications like this are less stressful for the battery, since high voltage charging is not needed and ambient conditions are less extreme than in an EV, so they easily can work for another 10 to 15 years.

These systems come in especially handy for storing renewable wind and solar energy. For example, in Europe energy use peaks in the winter, but this is also when it's cloudy and less windy for extended periods, reducing the amount of renewable energy available. Currently when this happens, Europe uses energy from “dirty” sources like oil or gas. With battery energy storage systems in place, excess energy captured on sunny and/or windy days can be used instead.

Another way to accelerate the shift to a circular economy for EV batteries is greater collaboration between stakeholders across the EV battery value chain (e.g. material suppliers, battery manufacturers, automakers, recyclers, and policymakers). This would support developments such as standardization, modularity, simplifying processes, and “plug and play” designs that can be used in several applications. 

However, for now these developments are not the aim of car manufacturers (nor of battery makers), and collaboration between some stakeholders remains a challenge. After all, manufacturers are focused on making margin, and standardization would negatively impact their ability to be seen as a technology leader and keep after-sales service in-house, thereby maintaining revenue and brand recognition. 

As such, many developments needed to promote EV battery circularity may only happen through regulations and across the board specifications. These would be complex to undertake within just one market and under good geopolitical conditions. With the current rising geopolitical tensions and moves within some markets toward protectionism, developing regulations to promote circularity is even more challenging, and in fact things are largely moving in the opposite direction.

Increased demand for EV batteries comes with the need for innovative labeling solutions that can withstand EVs' unique environments, meet strict safety standards, and enhance circularity. We offer a variety of products specially designed to meet the needs of the EV industry.

For example, our RFID labeling and cloud solutions enable tracking and tracing of EV batteries and are key to improving the efficiency and security of EV battery systems. We are also developing “debond on demand” applications, which make it easier to disassemble, rework, and maintain EV batteries and promote the circular economy by helping cut waste, enable repairs, and boost recycling. 

EVs are here to stay, but much work needs to be done to create a truly circular economy for EV batteries and deliver on EVs’ full sustainability potential. The progress made in recent years is staggering, and makes it clear that innovation and collaboration can make it possible to overcome the hurdles we face.

As industry leaders, we understand the complexity of EV applications and know how hard it is to find the right expertise. If you’d like to learn more about EV battery circularity and how Avery Dennison can help you contribute, send us a message or take a look at Electrified, our hub for EV industry insights.