Study on Battery Recycling in the EU: Nine Billion Euros Needed by 2035

16/08/2023

Shortly before the updated EU Battery Regulation comes into force, the chair "Production Engineering of E-Mobility Components" (PEM) of RWTH Aachen University has published a study on the European battery recycling market. Due to high investment costs, the current structure of the value chain will move toward large recycling centers, according to the analysis published jointly with "PwC Strategy&". According to the analysis, after initial overcapacities, the recycling market will be fully utilized from 2030 onwards, requiring investments of more than 2.2 billion euros for the annual processing of around 570,000 tons of battery material.

  Cover sheet of the study on the EU battery recycling market Copyright: © PwC Strategy&

EU battery directive prescribes recycling quotas

"The general increase in electrification and the growing battery production due to electric mobility will drive the recycling market in Europe," says PEM Director Professor Achim Kampker. After South Korea and China are considered pioneers in battery recycling with their regulations from 2013, the EU will soon create legal framework conditions throughout Europe from 2023 with its revised Battery Directive. In doing so, the directive sets such things as higher recovery targets and recycling efficiencies, as well as a minimum proportion of recovered material in new batteries.

Total investment could be halved

"In order to still be able to process all recyclable materials from 2035, market players will have to spend another seven billion euros on their recycling capacities," says Kampker, co-author of the study "The EU Recycling Market – A Viable and Sustainable Business". Currently, a value chain is being built up consisting of the "preparation", "pretreatment" and "main processing" segments of battery materials. Further technological specialization, for example, could reduce the high total investment by up to 50 percent, according to the analysis.

Circular economy by 2040 seems unrealistic

"Recycled material could account for up to 30 percent of the demand for lithium, nickel, and cobalt in battery cell production in 2035 and could double this share by as early as 2040," says Dr. Jörn Neuhausen, co-author and Senior Director E-Mobility at Strategy& Germany. This suggests "that a completely closed battery market will not emerge in the next 20 years." Meanwhile, the team of authors expects the combination of high material volumes and low recycling costs to create an ideal market environment for the battery industry. "Recycling of batteries will be a profitable and sustainable business in Europe even before 2035," Neuhausen says.

The English-language document is available as a free download.