In November 2023, the UK government’s Battery Strategy, laid out an ambitious vision for a “globally competitive battery supply chain that supports economic prosperity and the net zero transition.” Central to achieving this vision is a circular EV battery market.
Departing from the linear ‘take, make, dispose’ model, the circular economy prioritises keeping resources in use as long as possible and minimising waste. For batteries this translates to extending battery life, recycling valuable components and, where possible, re-use in second-life applications. Today, only 5% of batteries are recycled. Overcoming high costs and developing new technologies are central to ensuring recycling and re-use prevail over disposal.
For EV fleets, taking a circular approach means undertaking proper battery management to extend battery life and protect residual value. This will reduce replacement costs and help secure revenue in second-hand markets, all supporting a reduced total cost of ownership.
Battery recycling
Anticipating the potential, recycling could meet at least 10% of EV battery critical mineral requirements by 2035. China, a global market leader, has invested £2.8 billion in a large-scale recycling facility, while Germany is constructing Europe’s largest shredding facility. Of the nearly £1.8 billion worth of lithium-ion battery packs imported by the UK in 2022, £0.9 billion came from China and £0.3 billion from Germany.
If the UK seeks to contend as a player in the global market, it must follow suit and secure substantial investment and support for domestic recycling capabilities. The urgency is heightened by EU regulations mandating minimum levels of recycled content in batteries sold within its borders from 2031, a requirement for UK EV battery producers to maintain access to the EU market.
Second life batteries
Beyond recycling, exploiting secondary applications for EV batteries is fundamental to a circular battery market. Alongside selling used EV batteries in the second-hand market, remanufacturing can provide batteries with a second life in storage applications. This aligns with the UK’s focus on stationary battery storage as a key mechanism to provide grid resilience amid the shift to intermittent renewable energy. Moreover, EV batteries at the end of their vehicle life typically retain two-thirds of their capacity. Leveraging existing batteries for energy storage needs alleviates environmental concerns, strengthens energy security, and aligns with economic priorities.
The Faraday Institute estimates that 16,500 tonnes of battery packs will require processing by 2028, with volumes rising to approximately 150,000 by 2035. As these batteries near the end of their primary life, strategic planning for their secondary life becomes a critical. Managing the entire battery life cycle through a circular economy approach will help maximise the benefits from the EV transition and support the UK achieve it’s aims for three main reasons.
1. A circular model directly addresses environmental concerns associated with EVs
Recycling batteries significantly reduces the environmental impact of critical mineral extraction. Romare & Dhallog’s research shows that, even considering emissions during recycling processes, a net saving of 1 kg CO2 per battery is achieved through recycling.
This CO2 reduction is attributed to the decreased need to extract virgin materials, which is particularly important given the disruption to sensitive ecosystems and significant water usage associated with lithium and cobalt mining. Reduced demand for mining in countries with weak labour regulations also helps curb worker exploitation and prevents displacement of indigenous communities.
EV batteries play a vital role in the green energy transition and are much more climate friendly than alterative petrol or diesel vehicles. By adopting circular practices like recycling and re-use, the UK can enhance battery sustainability further, diminish reliance on mining and effectively address concerns about the embodied carbon of EVs. Until recycling and remanufacturing become cost-competitive, a prerequisite for their large-scale adoption, the UK government must consider how best to ensure the development and growth of domestic capabilities.
2. A circular model strengthens the domestic economy and energy security
Continued reliance on countries like China and Germany for lithium-ion battery production could pose economic risks. Without building circular capabilities the UK will continue to depend on foreign imports and miss a key opportunity to boost the domestic economy.
Retaining battery value within the UK through recycling, repairing, and remanufacturing supports job creation and a strengthened domestic battery supply chain. On top of this, utilising used EV batteries as stationary storage supports grid resilience and increased integration of renewable energy. With some forecasts suggesting that second-life batteries may be 30% to 70% from 2025 onwards, even the economic benefits become indisputable.
3. A circular market provides financial incentives for widespread electrification
Finally, the secondary market for EV batteries offers businesses a compelling economic incentive to accelerate fleet electrification. The market for second-hand EVs is already booming, with UK battery electric vehicle sales doubling in the third quarter of 2023. By managing EV batteries properly, through optimal charging practices, businesses can sell used batteries to unlock a significant new revenue stream. This makes battery management a necessity – without which batteries will degrade and, in turn, business will find it difficult to secure higher prices in the second-hand market.
Alongside proper battery management, participation in the second-hand market requires demonstrating battery performance. Hitachi ZeroCarbon provides accurate monitoring and assessment of EV battery performance for commercial fleets. Through battery management support and provision of comprehensive datasets, we enable businesses to protect battery health, extend battery life, and enhance residual value. This means businesses can confidently sell their used batteries and secure an additional revenue stream.
While challenges such as limited recycling scalability and lack of battery standardisation persist today, the UK cannot afford to overlook the benefits tied to a circular EV battery market. Embracing circular practices improves environmental sustainability, economic resilience, and business incentives for electrification. Supporting battery recycling and secondary applications early on will support the UK’s success in meeting 2030 ambitions and asserting itself as a global player.
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