Along with the swift development of the Chinese new energy vehicle (NEV) industry, the number of retired power batteries has risen year over year with Chinese waste power battery volume estimated to exceed 18GWh in 2021 and reach 91GWh by 2025, according to TrendForce’s latest investigations. Currently, power battery recycle and reuse is primarily divided into echelon utilization and material recycling. Chinese waste battery material recycling already possesses a certain scale with a 2020 market size of RMB2.4 billion and it is estimated to reach RMB26 billion by 2025.
TrendForce adds, the current Chinese Ministry of Industry and Information has officially announced the “14th 5-Year Industrial Green Development Plan,” expressing a wish to promote a transformation in resource utilization. In terms of the recycling and reuse of waste power batteries, it proposes a comprehensive set of laws and regulations for power battery recycling, exploring and promoting new business models such as “internet + recycling,” strengthening traceability management, encouraging upstream and downstream enterprises in the industrial chain to build shared recycling pipelines, and establishing a set of centralized recycling service stations. In addition, scaled echelon utilization in fields such as waste power battery energy storage, backup, charging, and exchange will be promoted to establish a set of echelon utilization and recycling projects and build a more complete power battery recycling structure by 2025.
Power battery recycling and reuse include echelon utilization and materials recycling. In echelon utilization, power batteries with charge capacities that have dropped to 80% or less are used in applications such as power backup, energy storage, or other related fields. Currently, most examples of echelon utilization are at an experimental demonstration stage. In materials recycling, retired power batteries are dissembled, valuable metals such as lithium, cobalt, and nickel recycled, and reused in the recycled manufacturing of battery materials (e.g. ternary precursors).
TrendForce believes the development of NEVs is an important avenue in the promotion of energy conservation. The rapid development the industry will inevitably be accompanied by the large-scale retirement of power batteries in the future and bring industry opportunities for power battery recycling and downstream echelon utilization. Currently, the battery recycling business still faces a number of bottlenecks such as the fragmentation of power battery life cycle information, a lack of testing standards for retired batteries, improvement of technical standards for echelon utilization, and fluctuations in metal pricing affecting the economics of material recycling. These are all factors that restrict the recycling and reuse of power batteries. China’s new battery recycling policy will promote the orderly and healthy development of the lithium battery industry in the future and help break through the constraints of lithium and other key global resources.
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As the global automotive industry picks up the pace of electrification, there will be a corresponding increase in the demand for nickel, which is a key ingredient for automotive batteries, according to TrendForce’s latest investigations. Incidentally, Indonesia has recently made gradual announcements indicating that it intends to terminate the export of such unprocessed ores as nickel, copper, and tin, and this restriction will likely have an impact on the global supply chains in which these materials are used. Indonesia possesses the world’s highest volume of nickel reserves (which refer to the total availability of nickel in the country), at 21 million tonnes, representing more than 20% of the global total. With regards to nickel production (which refers to the actual amount of nickel that is mined), on the other hand, Indonesia accounts for more than 30% of the global total. As such, Indonesia is the primary source of raw materials for NEV (new energy vehicle) batteries manufactured by countries such as China.
TrendForce further indicates that, as a key upstream material for EV battery manufacturing, nickel is primarily used for raising the energy density of NCM batteries. As EV battery development progresses towards increasingly high energy densities, the direction of cathode development has gradually trended towards nickel-rich NCM as the mainstream. Hence, the consumption of nickel in EV battery cathodes has been undergoing a steady growth.
As the volume of NEV sales increases, so has the installation volume of EV batteries. Take the Chinese automotive market as an example; cumulative NEV sales for the January-July period this year surpassed the annual sales volume for 2020. TrendForce expects annual NEV sales in China to surpass 3.3 million units this year (including both heavy and light vehicles), representing an over 140% YoY growth. Likewise, cumulative EV battery installation in China for the January-October period reached 107.5 GWh, a 168.1% YoY increase, while automotive NCM battery installation reached 54.1 GWh, accounting for 50.3% of the total EV battery installation. These figures would suggest that the growth of the NEV market in China has generated a definite increase in the demand for nickel.
TrendForce believes that the NEV market will continue to expand its demand for battery materials, including primarily nickel, for several reasons: First, the penetration rate of NEVs has been rising at an increasingly rapid pace. Second, EV cathode development has been trending towards a nickel-rich composition. Finally, nickel-rich NCM materials are suitable for fulfilling the automotive market’s demand for high energy density batteries. Indonesia’s decision to terminate the export of certain unprocessed ores may not have an impact on the global supply chains in the short run. However, going forward, this decision will likely transform the supply situation of the nickel industry, force battery manufacturers or nickel chloride suppliers to establish facilities in Indonesia, and eventually raise the added value of products related to the Indonesian nickel industry.
Nevertheless, whether the production capacity generated by the establishment of facilities in Indonesia can satisfy the market demand in time will depend on not only the quality of Indonesia’s infrastructures and electricity supply, but also domestic political environments, availability of labor force, and other external factors. Therefore, TrendForce believes that, in the long run, Indonesia’s export restrictions on raw materials will likely exacerbate the shortage of nickel and subsequently of EV batteries, thereby potentially hindering the rapid advancement of the EV industry.
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