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US Inflation Reduction Act Boosts EV Battery Recycling

Little-known provisions in the US Inflation Reduction Act are driving a surge in electric vehicle (EV) battery recycling within North America, positioning the region to challenge China’s global dominance in this field. The act enables EV battery materials recycled in the US to qualify as American-made for subsidies, regardless of their origin. This crucial qualification entices automakers to use US-recycled battery materials for EV production incentives.


US Inflation Reduction Act Boosts EV Battery Recycling p
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Industry officials and experts interviewed by Reuters reveal that this development has sparked a boom in US factory construction, incentivizing automakers to research more recyclable batteries. Consequently, this move could eventually limit the availability of used EVs for buyers in developing countries.

Until now, China has controlled almost all global EV battery recycling, operating in a market estimated to grow from $11 billion in 2022 to $18 billion by 2028, according to research firm EMR. As the number of EVs increases and older vehicles are retired, this recycling business is expected to expand.

Key minerals found in these batteries, such as lithium, cobalt, and nickel, have an average value of €1,000 to €2,000 per car, as stated by Thomas Becker, BMW’s sustainability chief.

The initiative to recycle these valuable materials in the US has spurred rapid growth, and some predict that up to 40% of battery materials used in new EVs could be sourced from recycled stocks by 2040.

The allure of recycling lies in the fact that these minerals can be recycled infinitely without losing their potency. This means that as EV production rises, the demand for these materials may outstrip supply, making recycling a sustainable solution.

Companies like Li-Cycle and Redwood Materials have secured significant US government funding to establish battery recycling plants, and other firms are also planning to open European recycling facilities in the coming years.

The US approach has been perceived as a more proactive and self-sustaining approach than that of the European Union, which has primarily focused on imposing mandates for minimum recycled materials in future EV batteries.

Ultimately, the race is on to establish “closed-loop supply chains,” where recycled minerals are reused in locally produced new batteries. This move aims to reduce dependence on China, which still leads the race despite the US’s recent efforts.

As the volume of available EV batteries for recycling is expected to increase tenfold by 2030, companies are investing billions in this sector, attracting corporate investors, automakers, battery manufacturers, and mining giants.

While the growth in EV recycling is promising, the challenge lies in securing higher yields and ensuring that old EVs stay within the recycling loop. With new EU mandates on recycling and strict conditions on recycling outside Europe, there is a growing emphasis on keeping recycling processes local.

Companies like Ecobat have improved their recovery processes, and efforts are underway to increase lithium, cobalt, and nickel yields to meet future EU requirements. The EU’s push for increased recycling within its boundaries aims to reduce reliance on cheaper overseas recycling markets, potentially impacting developing countries’ access to affordable transportation.

In light of these developments, the US’s focus on recycling is shifting the dynamics of the EV battery market, fueling a surge in recycling efforts and challenging China’s long-standing dominance in this critical industry.