The adoption of electric vehicles (EVs) is growing fast, with their global sales rising 25% to reach 17.1 million in 2024, driven by government incentives and decarbonization efforts.
The EV market is actually projected to experience a steady annual growth rate of 6.95% over the next four years to reach a volume of over $1 trillion. Market revenue meanwhile is expected to reach $828.6 billion worldwide.
More importantly, EVs are expected to play a key role in achieving the ambitious goal of zero-emission targets by 2050. However, for that, EV makers need to bring down the cost of their vehicles because while EV sales are rising, their pace of growth has slowed down. Not to mention, EVs have a negative environmental impact as well.
Electric vehicle production is a resource-intensive process, requiring an average of six times the critical mineral inputs such as lithium, cobalt, copper, nickel, manganese, and graphite than internal combustion engine vehicles, which puts EVs’ environmental footprint 50% higher than ICEVs during production.
Recycling these batteries can really change the game here. It can help bring down the carbon footprint by reducing the cost of electricity, the need to extract raw materials to manufacture new batteries, and waste by extending existing batteries’ life and, in turn, making EVs cheaper.
Yet another way to improve the efficiencies of these batteries while reducing their impact is by repurposing them. Repurposing an EV battery can give it a second life, with second-life EV batteries maximizing the value of batteries and increasing their life expectancy.
Latest researchers and reports find that recycling and repurposing offer great advantages and are only going to grow from here.
Recycling EV Batteries
New research1, which is the first known lifecycle analysis of lithium-ion battery (LIB) recycling based on data from an industrial-scale recycling facility, has found that recycling delivers significant environmental benefits.
From water usage and energy consumption to greenhouse gas emissions, it all gets meaningfully reduced when batteries are recycled rather than mining for virgin metals to produce new LIBs.
The production of LIBs has been experiencing exponential growth due to the rise of vehicle electrification as well as intermittent renewable energy generation. The usage of LIB has simply gone far beyond consumer electronics. Moreover, these other use cases are growing at a strong pace.
The EV sector, in particular, is expected to dominate LIB growth by 2030, accounting for as much as 82% of the estimated total global LIB production.
However, while the demand for lithium-ion batteries is growing fast, critical materials that are required for leading lithium battery chemistries are in limited supply. They are actually expected to face a major deficit in its global supply-demand balance before the end of this decade. On top of that, extracting these materials has been exacerbating economic, environmental, human rights, and national security concerns.
Not just the mining of these critical materials but also the improper disposal of end-of-life LIBs is damaging natural and human ecosystems.
This is where recycling critical materials in end-of-life LIBs can be of immense help in diminishing the growing environmental concerns. This is also essential for the long-term sustainability of electrified transportation, as recycling can even help relieve the long-term supply insecurity of these critical battery minerals on a large scale.
Now, LIB recyclers source materials from either ‘dead’ batteries, which are mostly collected from workplaces, or defective scrap material from battery manufacturers. In the recycling process, metals like lithium, nickel, copper, cobalt, manganese, and aluminum are extracted from these two sources.
The lifecycle analysis study from Stanford University quantified the environmental footprint of this process and found that it emits less than half the greenhouse gases (GHGs) of traditional mining and refinement of these metals. It also uses about one-fourth of the water and energy of mining new metals.
When defective scrap materials are utilized for recycling, the environmental benefits are found to be even greater. Scraps actually accounted for about 90% of the recycled supply studied, and their results were 11% of the energy use of mining and processing, 12% of the water use, and 19% of the GHG emissions. Reduced energy use also corresponds to fewer air pollutants like soot and sulfur, though this was not specifically measured.
This study, according to its senior author William Tarpeh, who’s an assistant professor of chemical engineering in the School of Engineering, “tells us that we can design the future of battery recycling to optimize the environmental benefits.”
The environmental impacts of batteries actually depend heavily on the location of the processing facility as well as its electricity source.
As one of the three lead investigators of the study, Samantha Bunke, a PhD student at Stanford, noted, if a recycling plant relies a great deal on electricity generated by burning coal, then it would see a diminished climate advantage. However, in regions with cleaner electricity, fresh water water shortages are a great concern.
Yet another key factor is transportation due to the geological location of the material supply.
When it comes to cobalt, 80% of its global supply is found and mined in the Democratic Republic of the Congo, a vast majority of which travels by rail, road, and sea to China for refining for batteries. Similarly, lithium’s global supply is mainly focused in Chile and Australia, where it makes its way to China. The study estimates the total transport distance for just the mining and refining of batteries’ active metals to be averaging about 35,000 miles (57,000 kilometers).
A similar process follows for battery recycling, where used batteries and scrap are first collected and then sent to the recycler. However, the total transport distance of used batteries from our phones or EVs to a hypothetical refining facility in California is only about 140 miles (225 kilometers), based on presumed optimal locations for future refining facilities amidst abundant US recyclable batteries.
A Massive Opportunity
The data for this study came from Redwood Materials in Nevada, which is the largest industrial-scale lithium-ion battery recycling facility in North America. The facility benefits from the country’s cleaner energy mix, which includes solar, hydropower, and geothermal.
Founded by Tesla (TSLA +2.22%) co-founder and ex-CTO, Redwood has two facilities, one in Nevada and the other in South Carolina. A few months ago, German automaker BMW signed a deal with the company to recycle Li-ion batteries from all of its EVs, covering both the battery and hybrid types.
Redwood already recycles EV batteries from Tesla, Toyota (TM +2.13%), Ford (F +2.73%), Nissan, Lyft (LYFT +1.88%), General Motors (GM +1.4%), Amazon (AMZN +1.95%), and others. It also recycles stationary batteries.
The company processes anode and cathode materials and transforms them into “high-quality” battery materials. According to the company, they recover as much as 98% of these materials and return them to the supply chain.
Now, for the study, Redwood Materials didn’t just supply the data but even applied its lessons to its operations and environmental footprint.
“The insights of this research have played a key role in refining Redwood’s battery recycling processes.”
– Founder and chief executive JB Straubel
He further said:
“Thanks to the researchers’ observations. We have further reduced our environmental footprint while also advancing both resource efficiency and process scalability.”
Notably, Redwood’s recycling process involves “reductive calcination,” which does not use fossil fuels, requires significantly lower temperatures, and outputs more lithium than typical methods.
This means the company’s environmental outcomes do not represent the industry’s overall environmental performance for recycling used batteries. However, other pyrometallurgical processes are emerging in labs that are not energy-intensive like conventional methods.
With this study, the researchers aim to inform the scale-up of battery recycling companies of the importance of picking good locations for new facilities and preparing for the upcoming mineral supply problem.
According to Tarpeh, the opportunity here is significant as only 2% to 47% of lithium-ion batteries are recycled globally despite containing materials that have about 10 times higher economic value than lead-acid batteries, 99% of which have been recycled by the US for decades.
“For a future with a greatly increased supply of used batteries, we need to design and prepare a recycling system today from collection to processing back into new batteries with minimal environmental impact,” Tarpeh stated. “Hopefully, battery manufacturers will consider recyclability more in their future designs, too.”
Repurposing EV Batteries
While lithium-ion batteries can be recycled to recover valuable and critical raw materials and then reintroduced into new EV batteries, repurposing them for second-life applications prior to recycling offers immense benefits, too. These benefits, a new report argues, are far greater than repurposing a Li-ion battery.
The report by IDTechEx took a deep dive into second-life electric vehicle batteries, which are retired once they no longer meet the performance requirements for the EV. This happens at the end of their first life.
When EV batteries are recycled, they are repurposed for lower-power EVs or stationary battery storage, which, according to IDTechEx, are less demanding use cases compared to those of EVs.
However, the report noted that repurposing Li-ion batteries maximizes their value, extends their lifetime, and contributes to a circular battery economy. In some cases, even their first life can be extended in an EV application by replacing some modules or cells in a battery pack.
IDTechEx projects the second-life EV battery market to be valued at $4.2 billion by 2035 as the availability of retired EV batteries grows in the next ten years.
This is actually already happening at a growing pace worldwide. In the US and Europe, repurposers are continuing to steadily increase their volume of second-life battery deployments. Mainly, these stationary or mobile systems are being installed for commercial and industrial (C&I) customers for the optimization of EV charging, reducing electricity consumption when demand is at peak and self-consumption of renewable energy.
Residential battery storage tech has also been developed by some repurposers, while others are building larger battery energy storage systems (BESS) for grid-scale applications.
China is currently leading the deployments of second-life batteries and has been scaling up its activities too. The country is utilizing second-life batteries for telecom backup power applications.
Outside of China, Europe is seeing the highest level of activity, with IDTechEx identifying 20 repurposers developing second-life batteries in the region.
When it comes to the cost of these second-life EV batteries, the report notes that substantial cost reductions of first-life Li-ion BESS technologies have made it really difficult for repurposers to remain competitive on their systems’ prices to customers. For their adoption to rise, second-life EV batteries need to be priced lower than first-life Li-ion BESS.
These batteries have already gone through degradation in their first life, which means their performance is affected in their second life.
As for factors contributing to the higher cost of these second-life battery energy storage systems, the report pointed out battery components and retired EV battery delivery logistics. The repurposing process itself contributes to the cost, which includes battery grading times, disassembly, and reassembly. So, repurposers will have to target all these fronts to reduce their costs.
Already, advanced battery grading technologies are being developed such as in-vehicle end-of-life battery testing to determine battery State-of-Health (SOH) that takes minutes instead of hours as per typical cycling techniques, which brings down both the testing time and cost.
Additionally, numerous projects are making use of semi-automated battery disassembly technologies. If these emerging projects become successful, this can reduce the need for humans to intervene in certain steps, which would reduce labor costs and, in turn, the repurposed battery cost.
The repurposing of retired batteries, as per the report, can be done at different levels of disassembly. This could be at pack level, module level, or cell level.
The deeper we go into disassembly, the longer it takes and the higher the labor costs. However, this allows for the reassembly of the best-performing modules or cells, such as creating a better-performing system. According to the report, repurposers are mainly adopting pack-level or module-level repurposing techniques, and it is expected that this will continue.
EV battery trends are also expected to impact the economic feasibility of repurposing in the long term. “IDTechEx illustrates how cell-to-pack (CTP) designs can improve a battery pack’s energy density and, consequently, an EV’s driving range. However, these designs typically require an increased use of spot welding or adhesives. Removing them requires heat or solvent usage, thereby, increasing the cost of disassembly.
Another important element in the growth of second-life batteries is regulations, which have been a huge contributing factor to EV growth. Policies like tax incentives to reduce EV costs and emission mandates and requirements to encourage EV sales along with charging infrastructure and bans on ICEVs have greatly benefited the EV market.
Meanwhile, financial incentives, buy-back programs, and setting recovery, collection, and recycling targets are contributing to battery recycling growth. But while there are regulations available for the recycling of batteries across different regions, few policies exist that specifically address second-life EV batteries.
The likes of the US, China, and the EU, however, have started working on their regulatory frameworks to facilitate second-life batteries and repurposing.
Policies like the EU Battery Passport which tracks a battery’s life cycle, provision of EOL battery data to be shared across stakeholders, and extended producer responsibility (EPR) which makes manufacturers responsible for batteries’ collection, reuse, and recycling are enabling the repurposing of batteries.
While countries have begun to realize the potential value of second-life batteries, the report noted that special attention needs to be given to incentivizing players to repurpose rather than recycling batteries prematurely.
Relevant Companies
As we shared above, privately-held Redwood Materials is a big name in battery recycling. As for those involved in the repurposing of batteries, the IDTechEx report highlights Higher Wire, Smartville, Terrepower, RePurpose Energy, and B2U in North America. Meanwhile, in Europe, the likes of Zenobe, Allye Energy, Cidetec, Betteries, Covalion, and Ecobat, among others, are prominent second-life repurposes and remanufacturers.
Now, let’s take a look at some publicly listed companies in this sphere:
1. Li-Cycle Holdings (LICY -5.94%)
This one is involved in recovering critical materials for a clean energy future. The company utilizes patent-protected Spoke & Hub Technologies to recycle lithium-ion batteries.
Li-Cycle Holdings Corp. (LICY -5.94%)
Li-Cycle Holdings has a market cap of $35.78 million while its shares currently trade at $1, down 43.5% YTD. Its EPS (TTM) is -5.88, while the P/E (TTM) ratio is -0.17. For Q3 of 2024, the company announced revenue of $8.4 million, reflecting a 79% year-over-year growth. It also closed an upsized $475 million loan from the DOE.
2. American Battery Technology Company (ABAT +2.63%)
This one focuses on battery recycling and resource extraction. It has a market cap of $138 million while its shares trade at $1.52, down 34.15% YTD.
American Battery Technology Company Common Stock (ABAT +2.63%)
American Battery has an EPS (TTM) of -0.96 and a P/E (TTM) of -1.68. For the three months ended Sep. 30, 2024, ABTC reported just over $200K in revenue and was awarded a $150 million grant from the DOE for the construction of a second lithium-ion battery recycling facility. At the end of this period, the company had $5.8 million in cash.
Conclusion
Electric Vehicles are set to play a key role in achieving zero-emission targets set for 2050, but of course, concerns are still there in terms of cost and environmental impact. However, researchers are finding even better and newer ways to make them even more cost-effective and environmentally friendly. Here, recycling and repurposing of lithium-ion batteries, which are the most common type used in EVs, are emerging as promising solutions to address the sustainability concerns of the EV revolution.
Battery recycling, as we have seen, has the potential not only to bring down the cost of EVs and boost their adoption but also to be good for the environment. Second-life battery applications, meanwhile, can expand their life and value. These solutions offer a way to achieve more sustainable and cost-effective EVs and an accelerated transition to a greener future.
Click here for a list of top EV stocks to invest in.
Study Reference:
1. Machala, M. L., Chen, X., Bunke, S. P., Forbes, G., Yegizbay, A., de Chalendar, J. A., Azevedo, I. L., Benson, S., & Tarpeh, W. A. Life cycle comparison of industrial-scale lithium-ion battery recycling and mining supply chains. Nature Communications (2025). https://doi.org/10.1038/s41467-025-56063-x