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The battery recycling industry has grown substantially over the past decade, primarily driven by the value of materials found in NCM batteries. However, with the increasing market share of LFP batteries globally, the need for recycling technology specific to LFP is also rising. Considering LFP cells made up over 40% of the global battery market in 2023, the emergence of the LFP recycling market has seen large regional disparities and challenges in its establishment.
The LFP market
Currently, LFP technology is largely concentrated in the Chinese market. Close to 70% of China’s EV battery deployments year to date have been LFP. In contrast, LFP shares in Europe and North America remain modest, at 8% and 9%, respectively. However, market share is set to increase in coming years due to China’s increasing exports, of both EVs and cells and plans for LFP production outside of China develop
Similarly, the energy storage market saw more than 90% of global deployments using LFP in 2023, a trend that is projected to continue as the sector experiences rapid expansion.
Recycling required by law
Globally, various legislations are driving the demand for battery recycling. In Europe, laws such as the Critical Raw Materials Act and new battery legislation require recycling of batteries. While the US lacks federal regulations, several states are in the process of implementing “extended producer responsibility” laws, mandating battery recycling. China has also proposed legislation, including the “Measures of Comprehensive Utilisation of NEV Batteries,” to ensure battery recycling. Other countries such as India, South Korea, and Nigeria are also developing battery recycling frameworks. This growing legal pressure will encourage LFP battery recycling market.
Challenges to LFP recycling
Rho Motion battery recycling research analyst Jessie Xu, commented “The main challenge associated with LFP recycling is the operational costs compared to the low value of the recovered materials.”
“The market price of lithium, (the primary metal for LFP extraction), is currently very low. This low lithium price presents a challenging industry to reach profitability.”
Xu continued “The volatility of lithium material itself within the refining process also presents challenges regarding the technology needed to recover it.”
There is an overcapacity of LFP recycling capacity compared to the available LFP feedstock which is expected increase towards 2030. However, this is heavily skewed towards China.
China dominates LFP battery recycling but there are opportunities in Europe and North America
The sheer size of the LFP market presents opportunities for its recycling. China is a dominant force in the LFP recycling market, benefiting from a large supply of end-of-life (EoL) LFP batteries, production scrap, and advanced recycling technology. As a result, China’s LFP recycling industry is far more developed than those in other regions. Outside of China, all LFP recycling technology remains at R&D or pre-commercialisation stages. An exception is ABEE that is one of the only large-scale players to date to announce an LFP recycling facility in Europe or North America, however it still remains in a planning stage. Elsewhere, Vitesco and Kyburz struck up an LFP recycling partnership in Germany.
Rho Motion’s evaluation, opportunities lie in future LFP volumes
The LFP recycling market remains constrained by the availability of feedstock, with most feedstock focused in China. However, as more LFP feedstock become available, there is potential for growth. As OEMs and battery producers increase their LFP product lines, the volume of LFP scrap is expected to rise. Despite this, the low value of lithium presents hurdles to revenue potential.
Some industry players may also explore battery reuse as a way to maximise the potential of EoL LFP batteries, potentially complementing recycling efforts.
While the LFP battery recycling market presents clear opportunities, it faces significant hurdles, particularly around profitability and supply chain development outside of China.
More Information
For more information about the battery recycling market, capacities, industry trends and more, please see our Battery Recycling Research, or get in touch.
Image credit: Adobe Stock
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