aerial view of a cobalt mine

Understanding How EV Battery Recycling Can Address Future Mineral Supply Gaps

RMI’s new Battery Circular Economy Initiative Dashboard can help EV battery stakeholders make data-driven planning and investment decisions.

As demand for electric vehicles (EVs) grows, so does demand for the batteries that power them. Many are concerned that today’s EV battery (EVB) supply chain will be unable to meet this increased demand, and for good reason: today, the supply chain is vulnerable to disruption due to geopolitics, changing trade alliances, extreme weather, and a host of other factors. It is also too geographically concentrated; the upstream (mineral extraction), midstream (refining materials into battery cells), and downstream (battery assembly) portions take place in just a few countries. If the upstream or midstream in just one of these countries is disrupted, the effects reverberate globally, hindering EV production.

Of specific concern is the supply chain’s ability to provide enough of the minerals that go into EVBs. And then there’s the question of the domestic midstream capacity: does the United States have the facilities needed to process and refine these minerals into battery-grade materials?

RMI’s Battery Circular Economy Initiative’s (BCEI) Dashboard can help answer these questions and more. The dashboard helps stakeholders understand by how much electric vehicle battery demand will grow and to what extent the domestic supply chain is capable of meeting demand. It reveals what quantities of end-of-life EVB materials will be recoverable, how these materials can meet anticipated supply gaps, and the potential environmental and economic benefits of EVB recycling. The dashboard also provides a Circularity Index (CI), which shows how circular the EVB supply can realistically be, based on the user’s understanding of a region’s recycling ecosystem. Using the dashboard’s comprehensive and detailed data, stakeholders can be more confident in their planning.

The Need for a Circular Battery Economy

In a circular battery economy, end-of-life batteries are reused, repurposed, or recycled. Reused batteries can be refurbished and then placed in an EV; repurposed batteries serve a new, non-EV purpose (e.g., stationary storage). Recycling involves extracting raw minerals from end-of-life batteries and using them in another product.

By recirculating the minerals from end-of-life EVBs, we can reduce our reliance on virgin materials, decrease emissions associated with their extraction, save money, and avoid some of the environmental and social harms associated with mining.

An increasing number of policymakers, private sector actors, and other EV stakeholders recognize the benefits of a circular battery economy and understand the need for significant investment and robust policy to make it a reality. RMI’s BCEI Dashboard helps them get the information they need to make sound, effective investment and policy decisions.

Filling the Data Gap

Existing data and tools have, by and large, provided only piecemeal glimpses of the EVB supply chain and have been unable to give both the big-picture and the granular insights needed to plan strategically. BCEI’s public dashboard fills this data gap by organizing disparate sources of information, databases, forecasts, and perspectives into a central repository that provides a level of insight and analysis unavailable elsewhere.

The dashboard helps stakeholders understand:

  • How much EVB demand will grow through 2030
  • Predicted EVB supply gaps in 2030 based on current corporate commitments, planned investments, and policies
  • To what extent different end-of-life EVB materials will be recoverable
  • To what degree these materials can meet projected gaps in supply and demand
  • Emissions reductions and economic benefits of recycling all end-of-life EVBs
  • How circular the EV battery supply can realistically be, based on the user’s understanding of a region’s recycling ecosystem

Users can reference default scenarios or insert their own inputs to create their own scenario.

Some questions the BCEI Dashboard can answer

The following examples are just a few of many questions the dashboard can help users answer.

In these examples, the following scenario is assumed:

Battery demand:

We will need 911 GWh of battery storage in 2030 for private passenger EVs, based on RMI’s projection of the Inflation Reduction Act’s (IRA) level of impact (referred to as “IRA level” in the dashboard) on EV adoption. A “high” level assumes that all EVs sold in the US are IRA compliant and therefore eligible for both available tax credits, totaling $7,500. A “low” level assumes that a minimal number of EVs sold are eligible for half tax credit as it may be difficult to comply with the foreign entity of concern (FEOC) guidance for the sourcing of battery minerals. The “medium” level is an average of the two bookends. In this scenario, a medium IRA level of impact translates to 56 percent EV sales penetration in 2030.

Recycling levels:

  • Battery life: 12 years
  • Collection efficiency: 99%
  • Recycling capacity: 95%
  • Lithium recovery rate: 80%
  • Cobalt recovery rate: 95%
  • Nickel recovery rate: 95%

For battery recycling, the defaults are based on an optimistic outlook. Collection efficiency and recycling capacity defaults assume a reverse supply chain structure similar to that of lead-acid automotive battery recycling. Strictly enforced regulations played an important part in increasing the recycling rate of lead-acid batteries; today, in the United States, nearly all of these batteries are recycled. The recovery rates are in line with that of the most efficient commercial lithium-ion battery recycling facilities.

Where is investment most needed?

Both public and private investment in battery supply chains have increased in recent years. While the passage of legislation like the IRA and a slate of announced private investments are encouraging, our research indicates they won’t be enough to meet EV demand. EVB stakeholders know that the supply chain needs significantly more investment, as well as more policies, to be fully prepared to meet EV demand.

The BCEI Dashboard can give users an idea of how announced investments will affect different stages of the supply chain. It uses EVB demand projections for private passenger vehicles through 2030, then breaks this demand down into product demand along the supply chain. It then compares existing and announced capacity for 2030, as well as current import levels, to estimate the gap between supply and demand of the minerals and components that go into EVBs.

With the dashboard’s default settings for 2030 (which are based on modeled private passenger segment EVB demand in the United States that take into account the impact of the IRA), it’s clear that the supply gap is smallest in the supply chain’s downstream and most pronounced in its midstream and upstream stages.

For example, we can see that anode and electrolyte solvent production will have supply gaps of nearly 80 percent. Cobalt extraction will have a supply gap of nearly 75 percent.

The United States must increase investment in the upstream in other countries to ensure there are enough minerals to adequately supply domestic production.

Given that no one country has all of the minerals needed for EVBs, the domestic EVB supply chain will always rely, to some extent, on foreign imports. That being said, the United States can reduce this reliance on other parts of the supply chain — especially the midstream — by investing in the expansion of domestic manufacturing capacity.

What happens if we recover 100 percent of lithium, cobalt, and nickel from end-of-life EVBs? To what extent will these recycled materials be able to alleviate mineral supply gaps?

Many recognize that recycling will help meet mineral demand; there’s less clarity as to what extent and when these recycled materials will be able to fill these gaps. Given that strengthening recycling infrastructure will require time, effort, and funding, stakeholders need actionable information to ensure that their policies and investments will be as impactful as possible.

The dashboard gives them the critical data they need to understand how recovering end-of-life EVB minerals can meet mineral supply gaps in a variety of different scenarios. For instance, assuming all material used in EVBs is recovered after 12 years, we can supplement the cobalt supply by 4 percent in 2030 and by more than 50 percent in 2040. While 100 percent recovery will not be possible, this hypothetical scenario allows us to understand the scale of potential impact.

The dashboard also shows the economic and environmental benefits of recycling through the year 2040. If all the lithium, cobalt, and nickel from end-of-life EVBs were recovered, economic savings could be as high as $25 billion a year by 2040, and we could avoid approximately 16 megatons of CO2 emissions annually.

Decisions based on the dashboard’s insights can bolster the business case for recycling and encourage much-needed policies. Users can also evaluate the emissions reductions and cost savings potential.

Realistically, what level of battery circularity can we expect to achieve? To what extent will the supply chain be circular for critical minerals like lithium, nickel, and cobalt?

Battery circularity is difficult to measure, as it encompasses many discrete and interdependent variables.

That’s why the dashboard provides a circularity index (CI), which — in the absence of comprehensive data — simulates the cumulative effects of end-of-life EVB collection, recycling, and individual mineral recovery rates; the results indicate the fraction of available critical mineral content that will be recovered in the assumed system. Subsequently, one can understand the fraction of environmental and economic benefits that can be realized.

Under the default assumptions, the CI for lithium is 75 percent; nickel and cobalt both have a CI of 90 percent. These results mean that 75 percent of the lithium and 90 percent of the nickel and cobalt content of end-of-life EVBs will be recovered. But if one moves away from the optimistic default scenarios and assumes that collection efficiency drops to 5 percent — as is the case for lithium-ion batteries used in consumer electronics in the United States — only about 4–5 percent of the lithium, nickel, and cobalt will be recovered.

Effective supply chain management requires measurement. All circularity planning strategies need an easy-to-understand, overarching goal to work toward. With this goal in mind, stakeholders can then consider approaches that can help reach that goal. If we want to get as close to a 100 percent collection rate as possible, what policy measures could help? If we want to ensure the announced recycling infrastructure is realized, what market and policy interventions could help de-risk investments? With the current state of circularity, what are reasonable recovery rate targets? Considering these questions will help stakeholders make decisions that maximize impact.

Alternatively, stakeholders can see what their circularity goal should be based on what can realistically be done. An organization may determine that a 50 percent end-of-life EVB collection rate is feasible. The dashboard then takes this rate, along with the user’s other inputs, and produces a CI. Decision makers can then share the CI with their stakeholders to ensure that all involved understand the end goal of their efforts.

How can policymakers use the tool’s insights to write effective legislation?

Policy has been and will continue to be a powerful instrument in advancing a circular battery economy. Recovery rate mandates, domestic content mandates, and extended producer responsibility have all been used as levers to encourage the growth of the nascent recycling industry; however, while we’re on the right track, we’ll need to carefully craft policies that can address the identified gaps to create a circular battery economy without stifling growth. The insights provided by the dashboard can help stakeholders understand the EVB supply chain, recognize its current and future gaps, and set realistic targets.

Given the burgeoning rate of EV adoption, there’s an urgent need for informed action. Armed with insights like those provided by the BCEI Dashboard, we know we can make a circular battery economy a reality and reap its economic, environmental, and social benefits.