The European battery circular economy needs new business models
Proposed solutions reduce recycling costs by 34 percent
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The technology for recovering raw materials from electric vehicle batteries is well-established. Nevertheless, Europe’s recycling industry is losing resources in the current process. The main causes: expensive hazardous materials transport, labor-intensive disassembly, and unsafe material recovery. This is shown in an interim report by the HHL Leipzig Graduate School of Management as part of the EU research project SAFELOOP, in which 15 institutions from 11 countries are working on a new generation of safe and sustainable lithium-ion batteries for electric vehicles.
If a recycling facility sells the raw materials recovered from a battery pack at market prices, it incurs a loss of approximately 1.90 euros per kilogram of battery pack after deducting all costs. A key reason: Since removed lithium-ion batteries are classified as hazardous materials, their transport is, on average, 16 times more expensive than that of standard cargo. Furthermore, according to the study, companies that specialize exclusively in battery recycling perform significantly worse financially than those with a broader business scope.
Upcoming EU Regulation Will Make Battery Packs More Expensive
These losses will have consequences for battery prices: Starting in August 2031, the EU Battery Regulation will require that a minimum percentage of the raw materials used in new vehicle, industrial, and starter batteries must come from recycling. The research team has developed a model: Assuming a recycling rate of 20 percent and applying the recycling plants’ losses one-to-one to this mandatory quota, a battery pack would become about 6 percent more expensive.
A second life creates value—just not for those who pay for it
One solution lies in the battery’s second life. For example, if a battery pack from an electric bus is reused as a stationary energy storage system after the vehicle’s service life, its total economic value over its useful life increases by 64 percent. According to the study, however, it is primarily vehicle and storage operators who benefit from this added value—not the manufacturers, who must bear the higher costs of recycling. The report thus highlights a distribution problem that is holding back the circular economy, even though it would be economically viable. Furthermore, second-life batteries must meet strict commercial requirements in the energy storage market—such as competitive costs, comprehensive data on battery condition, and long-term warranties. Eight expert discussions show that average costs, safety concerns, and investors’ risk assessments are further hindering widespread adoption.
Proposed solutions reduce costs by 34 percent
The report recommends safer battery designs, shorter transport routes, more automated disassembly, more specialized recycling facilities, and mandatory transport standards. Combined, these measures are expected to reduce recycling costs by about 34 percent. The current loss of 1.90 euros per kilogram of battery pack would turn into a profit of 13 cents per kilogram. However, as long as the added value of the circular economy primarily benefits vehicle and energy storage operators, many stakeholders lack the economic incentive to invest in precisely these improvements.
To solve the distribution problem among manufacturers, operators, and recyclers, the research team proposes new coordinating actors: companies that manage battery packs throughout both life phases, thereby distributing costs and revenues more equitably among the parties involved.
“Europe needs better business models for circularity”
“Such actors would own the batteries and the materials they contain. They could generate market pressure for innovation in upstream processes while simultaneously redistributing the value from the battery’s second life fairly,” explains study leader Dr. Dima Smirnov, a postdoctoral researcher at the Chair of Innovation Management and Entrepreneurship at HHL. “Europe therefore needs not only better battery processes but also market-based business models that make circularity economically viable.”
SAFELOOP is a collaborative project funded by the European Union to develop safer and more sustainable battery technologies for electric vehicles. The project considers the entire battery life cycle and aims to contribute to greater safety, sustainability, and competitiveness through new solutions in material supply, development, use, and recycling. The project began in 2024, will run for 36 months, and has an estimated budget of 4.7 million euros. At HHL, the project is led by Prof. Dr. Dr. Kelvin Willoughby.
Note: This article has been translated using a computer system without human intervention. LUMITOS offers these automatic translations to present a wider range of current news. Since this article has been translated with automatic translation, it is possible that it contains errors in vocabulary, syntax or grammar. The original article in German can be found here.
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Topic World Battery Technology
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Topic World Battery Technology
The topic world Battery Technology combines relevant knowledge in a unique way. Here you will find everything about suppliers and their products, webinars, white papers, catalogs and brochures.