Power battery recycling, the "pseudo-blue ocean" of gold panning in the sand?

Image source @ Visual China

Text | Car smart driving

Recently, the Association of Passenger Vehicles released the domestic passenger car production and sales data in 2021, of which the domestic retail penetration rate of new energy reached 14.8%, an increase of 5.8% compared with the penetration rate of 5.8% in 2020. With the gradual rise in sales of new energy vehicles, the 100 billion track of decommissioned power battery recycling has also been derived.

According to the analysis of China Merchants Securities Research Report, according to the 4-6 years service life of new energy vehicle power batteries and the service life of 5-8 years, the mainland ushered in the peak period of the first batch of power battery retirement at the end of 2021. And the penetration rate of new energy vehicles is rising rapidly year by year, and the future prospects of the power battery recycling market are very good.

Domestic battery recycling giant Grimme, battery manufacturer Ningde Times and LG New Energy, new energy vehicle companies BYD and Tesla and other participants in different organizational forms have poured into the power battery recycling track wrestling. According to the Tianyancha APP, enterprises and organizations related to power battery recycling have added 24,656 new companies in 1 year.

However, unlike other new energy vehicle segmentation tracks, the power battery recycling industry has not formed a pattern of giants dividing the market by three legs, but has shown a "deformed" industry situation in which formal institutions cannot grab the "black workshop".

How to pan for gold in the mixed power battery industry and establish a perfect and formal power battery recycling industry chain, power battery participants do not seem to have found an effective solution.

01 The beautiful vision of resource cascade utilization, and the embarrassing value orientation of the industry

From the perspective of maximizing resource utilization and environmental protection, the way in which the residual value is released by secondary utilization after recycling of old materials is higher than the value of direct material dismantling and reuse.

For example, mobile phones, the current mobile phone performance is generally excessive, through the secondary sale that can maximize the use of resources, but also indirectly improve the retention rate of mobile phones, alleviate the economic pressure of consumers to buy mobile phones. In general, most of the old items suitable for secondary recycling are high-value and high-residue values or "relative" standards (which require some treatment to become equivalents).

High value, high residual value rate, "relative" standard products, these three characteristics are the reason why power battery recycling is highly sought after by capital.

First of all, due to the scale effect and the help of technological breakthroughs, although the proportion of power batteries in the cost of the vehicle is gradually declining, the current proportion is still as high as 25%, and power batteries are high-value products. In addition, with the gradual rise in the price of cobalt, nickel, manganese, lithium, copper and other raw materials for power batteries, the production cost of power batteries has increased sharply, which has further improved the value of power batteries.

Secondly, when the power battery capacity is attenuated to about 80%-70% of the rated capacity, it cannot meet the power demand of the car and needs to be "retired" from the new energy vehicle. However, this "decommissioning" does not mean that the performance of the power battery has bottomed out, in general, when the capacity drops to 20%, the safety and practicality of the power battery will be greatly reduced, and it needs to be decomposed and rebuilt.

That is to say, the performance attenuation range of 20%-80% is the residual value of the power battery, and the residual value rate is high and can be used for secondary use, such as "transplanting" to low-speed two-wheeled vehicles, tricycles, forklifts, sanitation vehicles and other areas with low kinetic energy requirements, as well as industries with energy storage needs, such as the Chinese tower that uses lithium batteries instead of lead-acid batteries for power battery ladder utilization.

As we all know, the cycle life of lithium iron phosphate batteries is much higher than that of ternary lithium batteries, in other words, the residual value rate of secondary utilization of lithium iron phosphate batteries is also relatively high. In theory, lithium iron phosphate is more in line with the value orientation of the power battery recycling industry - after cascading utilization, and then through disassembly for resource recycling.

But the embarrassing thing is that in the current power battery recycling industry, the industry value orientation is "distorted", the priority of extracting precious metals through resource recycling is higher than that of excavating the residual value of power batteries through cascade utilization, and the recovery price of lithium iron phosphate batteries is far less than that of ternary lithium batteries.

The reason for this phenomenon, in addition to the more precious metal components of ternary lithium batteries, is mainly because industry participants cannot make "decommissioned" power batteries into standards, and there is no perfect recycling industry chain, which also triggers the chaos of "bad money expelling good money" in the power battery recycling industry.

02 There are many bugs, OTA escalation invades privacy? Bad money drives out good money, and the industry urgently needs "interconnection"

The use of power battery ladder is not a simple direct replacement use, such as the No. 5 battery in the remote control toy racing car can be directly installed in the remote control for secondary use, in order to make the "decommissioned" power battery into a standard, manufacturers also need to "transform" it to a certain extent.

Just like the secondary sale of 3C products, before the sale, it needs to go through a series of operations such as appearance renovation and system brushing, and the power battery industry has not yet established a similar complete industrial chain.

It is not easy to establish a complete recycling system, "the difficulty of cascade utilization is not disassembly (disassembly of the battery package), but the lack of battery margin evaluation and measurement system, only by our self-evaluation after disassembly, the cost is too high to be cost-effective, and the efficiency is low." Yang Qi (pseudonym), the person in charge of a third-party power battery recycling company, told us.

According to the data of the National Energy Information Platform, assuming that the procurement cost of decommissioned power batteries is 20 US dollars / kWh and the utilization rate is 60%, the cost of battery recycling and dismantling and reorganization is 71.7 US dollars / kWh. Second-hand is more expensive than new, and a large part of the cost is in the evaluation of residual values.

The residual value of the power battery is not consistent with the different habits of the owner, even if it is the same batch of batteries of the same model, the residual value is also different. Therefore, the key to the use of the ladder is to evaluate the recycled power battery before it can be converted into a standard product for sale.

"Car companies and battery manufacturers on the battery internal information and communication protocol confidentiality, in order to become bigger, now can only cooperate with car companies and battery manufacturers, the power battery industry is a seller's market, and now to cooperate with car companies and battery manufacturers, there is one more 'daddy'." Yang Qi said.

That is to say, before the industry evaluation system has been established, it is difficult to run through the cascade utilization route, which has caused the resource recycling route to become the mainstream of the industry. At present, the vast majority of recovered power batteries are directly decomposed by dry (metallurgical pyrolysis) or wet (acid-base organic solvents).

However, power battery recycling is essentially the chemical industry, and not all companies have the qualifications to participate in it. Since 2018, the Ministry of Industry and Information Technology has only approved 47 companies to enter the "white list".

"White list" enterprises due to environmental protection, technology, employee health and other considerations, the cost is high, the cost increase leads to low recycling prices. The "black workshop" has no consideration in this regard, and the high recycling price has seized most of the "decommissioned batteries" on the market.

According to the Beijing News in July 2021, nearly 80% of the waste power batteries flowed to the "black market". The Daily Economic News surveyed in early 2022 and found that nearly 70% of the waste power batteries still did not flow to formal channels.

Yang Qi also said that although his company has not yet entered the "white list", it also belongs to the formal channel in the industry, and can only buy batteries in batches on the black market. "Even if you don't make money, you have to grab the scale, the recycling discount coefficient is not nothing, and some companies have to grab the battery when they post money."

Che Zhi driving believes that today's power battery industry bad money to expel good money, crowded in the narrow road of resource recycling is not cost-effective, the construction of the ladder recycling system has been further delayed. The industry urgently needs the regular army to warm up and bid farewell to the inner volume, and guide the industry to the road of positive development.

03 Taking the lead in promoting the positive development of the industry, formal enterprises have an unshirkable responsibility

From the perspective of the current upstream and downstream industrial chain of power battery recycling, the "regular army" can be divided into three categories:

The "self-produced, self-harvesting" value transferist.

The core logic of this faction is that, based on its full control of the all-round information of the power battery, with the help of a large-scale automobile sales network to recover the power battery, the value created will be transferred to the new car, and the retention rate of the new car will be improved. For example, Tesla, Weilai, Weima and other new energy vehicle companies.

The above known, the difficulty of ladder utilization is that car companies are not willing to announce battery-related technologies, and car companies do not have this problem, and the evaluation and dismantling of their own power battery margins are more efficient and less costly.

The most important thing is that the sales outlets of car companies provide users with great convenience, through the old battery replacement battery business can take over the "decommissioned" battery for the first time, the source of the battery is clear, and the subsequent circulation of the battery is also authoritative.

WM is already establishing battery traceability coding rules, using a unified battery coding for battery traceability. Tesla also launched a battery recycling service in China last year, according to the pricing rules of mileage for battery recycling.

Through this business, car companies have indirectly improved the retention rate of their own new energy vehicles and have stronger competitiveness. However, the disadvantage is that the disposal capacity of car companies for follow-up power batteries is not strong, and they need to cooperate with third parties, such as Weilai and Huayou Energy.

An extension of the industrial chain based on cost considerations

The faction is dominated by battery manufacturers, and its purpose is twofold: one is to reduce material costs and alleviate the dilemma of material shortage by recycling rare metals in batteries; the other is to extend its industrial chain in the battery recycling industry by entering the battery recycling industry and create a second revenue curve.

The advantage of battery manufacturers is that they are more professional, and at the same time, they cooperate with car companies more deeply, and it is easy to reach a united front. However, the disadvantage is the lack of recycling outlets directly facing the market, so similar to car companies, battery manufacturers mostly cooperate with third parties or invest in holdings.

CATL acquired Guangdong Bangpu as early as 2015 and announced an investment of 32 billion yuan to establish an industrial park in 2021. Large battery manufacturers such as LG Energy and BYD are also accelerating their layout.

3. Interest factions that seek supply through cooperation

Whether it is a car company or a battery manufacturer, it is indispensable to cooperate with a third party, and the two cannot form a closed loop in the industrial chain to give a third party the opportunity to enter the industry. Whether it is taking a pure resource recycling route or cooperating with other interest manufacturers to take a more complex echelon utilization route, third-party manufacturers are taking interests as the starting point.

In addition to the easier cooperation model, third-party companies also have ambitious unicorn companies. For example, Grammy, the leader of domestic battery recycling, has been carrying out battery recycling business since 2003 and plans to build power battery recycling bases around the world by 2025.

In general, the regular army of the above three factions has the common goal of promoting the power battery recycling industry to the regular and raising the upper limit of the industry, and the regular army with the same interests should reach a cooperation agreement as soon as possible, raise the industry threshold, and exclude the "black workshop".

Power battery "rough treatment" on the environment is extremely harmful, the industry can not and can not be like other industries slowly developed, from the growth period to the bubble period to the maturity period, should try to shorten the transition period, reduce the pressure caused by non-standard power battery recycling enterprises to environmental protection. In order to achieve this goal, power battery companies may also need positive supervision of relevant laws and regulations.

Resources:

[1] "The Funeral of lithium batteries" - magnifying lamp Guokr233

[2] "Waste power batteries recover each ton of million yuan, nearly 80% into the black market" - Beijing News