I remember that more than four years ago, an "Annual Meeting of China Power Battery Recycling Industry Alliance" was held in Shenzhen. More than 300 battery recycling companies gathered together, and the scene was hot.
At that time, a number of media reported that 2018 would be the first year of battery recycling.
Since 2018, every year some people say that it is the first year of power battery recycling. However, so far, the power battery recycling market has not really exploded.
However, everyone believes that the power battery will eventually be retired. The recycling industry is like a cornucopia, which will surely gather hundreds of billions of trillions of dollars of wealth.
Before such a billion trillion yuan market broke out, what was the current situation of the industry? As a practitioner, I try to give you an in-depth analysis.
In this article, you'll read about these keywords and core content:
Admission ticket: The power battery recycling industry has not yet carried out qualification management, the "white list" is like an admission ticket, and getting the admission ticket means having "recycling qualification", and the competition among players is fierce.
50% tax refund: In the short term, it will still focus on guiding policies and use tax preferential policies to reduce business operating costs.
Core competitiveness: process technology and equipment is the core competitiveness of recycling enterprises, in the safe and environmentally friendly conditions as far as possible to deal with batteries, improve the quality of recycled materials is the top priority.
Gameplay: Business models emerge in an endless stream, strange, combined with the background and characteristics of the enterprise, explore the layout of their own business models.
Material price: In the material rising channel, it is easy for enterprises to make money, study material price trends, formulate differentiated market strategies, and resist business risks.
01
Players: Small workshops and regular troops
Power battery recycling begins with the application of power batteries and begins with the promotion of new energy vehicles.
However, in the beginning, it is not the decommissioned battery that is recycled.
In the early stage of the promotion of new energy vehicles, the power battery manufacturing technology was very immature, and the yield rate was low, which gave birth to a number of small workshops and recycled the waste pole sheets of the battery cell factory.
Later, recyclers began to collect waste batteries, the remaining capacity is high, the detection indicators are sold at the ladder utilization price, and the bad manual dismantling is then sold to downstream smelting enterprises to extract the cathode material precursor.
During this period, small workshops were the main force of battery recycling.
With the continuous promotion of new energy vehicles, the problem of decommissioned battery recycling has gradually been paid attention to by the competent authorities, because it may pollute the environment and may also have safety hazards. The competent authorities have implemented an access system for power batteries.
On September 5, 2018, December 16, 2020, and December 16, 2021, the Ministry of Industry and Information Technology successively issued the "New Energy Vehicle Waste Power Battery Comprehensive Utilization Industry Specification Conditions" list of enterprises, and the first, second and third batches of "regular army" were born.
Source: Ministry of Industry and Information Technology, Battery Cloud Platform Collation
Power battery recycling enterprises from more than 300 in 2017 to 2021 accumulated nearly 3,000 registered, currently in line with the "new energy vehicle waste power battery comprehensive utilization industry specification conditions" only 45 enterprises.
Many of these companies have a lot to offer. Like Bangpu Cycle, Huayou Cycle, Grimme, Ganzhou Haopeng with the early 3C lithium cobalt oxide battery recycling, and with hazardous waste treatment qualifications, into the first batch of "white list". Behind Bangpu is the Ningde era, Huayou has mines and is a cobalt smelting leader, Grammy is the boss of the ternary precursor and the car dismantling network.
Of course, there are also new startups on the list that see opportunities for power battery recycling and join in.
During the epidemic in early 2020, Shenzhen Bus Group launched the first batch of new energy buses to decommission, with a total of more than 200 vehicles and more than 700 tons of batteries. Hengchuang Ruineng bid for the battery and won the first largest order in the history of power battery recycling, so it was on the website of the Ministry of Industry and Information Technology and became a hit.
Side Beauty can be called a model worker in the industry, in the absence of funds, little background, with material repair technology to win the white list of recycling enterprises in one fell swoop, it is not easy.
The regular army has appeared, is the power battery recycling on the right path?
Let's first calculate how many power batteries can be recycled.
Source: The author calculates according to the installed capacity of lithium batteries in new energy vehicles
According to the annual installed capacity of new energy vehicles, according to the energy density of 120wh/kg batteries, decommissioning and recycling after 4 years of use, roughly calculate the scale of decommissioned batteries. About 240,000 tons of power batteries will be retired in 2020.
Where did the 240,000 flow go?
According to industry statistics, the "regular army" recovered less than 50,000 tons. In 2021, the overall scale of recycling has increased, and some recycling scale has doubled, but due to the total amount of decommissioned batteries, prices, long-distance transportation and other factors, the recycling volume of several leading enterprises is not more than 10,000 tons, and most of the decommissioned power batteries have flowed into the "small workshop" for local recycling.
In mid-July 2021, 9 key enterprises in the production of new energy vehicles and batteries, including Geely, WM, Tianneng, Chaowei and Nandu Power, issued a joint statement, saying that the auction of waste power batteries restricts bidding companies from being "white list" enterprises, preventing middlemen and small workshop enterprises from participating in bidding, and also calling on new energy vehicles and power battery manufacturers across the country to comply with and standardize the flow channels of waste power batteries. These enterprises are models of response to national policies and promote the development of recycling industry norms.
However, the general trend is difficult to change. Although all kinds of players do their best to recycle batteries, but due to the high price, small workshops because they do not bear environmental responsibilities, low processing costs, often more dare to bid, recycling enterprises "not enough" Phenomenon still exists.
The "regular army" not only collects few batteries, but also is difficult to make a profit.
A possible example of profitability is the Ganfeng cycle.
Before 2020, during the downturn in the lithium carbonate market, Ganfeng Cycle took the lead in recovering lithium iron phosphate batteries to be profitable. Lithium extraction process technology is its core competitiveness, but also thanks to their recycling of a batch of lower-priced lithium iron phosphate batteries in 2017. The stock market value of parent company Ganfeng Lithium industry in 2020 once reached 30 billion yuan, which was dozens of times more than in 2017, which is worthy of attention and research in the industry.
02
Policy orientation is not enough
Waste batteries through the auction, the high price to choose the recycler, in fact, is not reasonable.
Look at what is being done abroad.
European and American countries have adopted legislation to establish a complete system of laws and regulations for the recycling of waste materials, clarify the penalties for illegal operations, and cooperate with the "deposit system" to recover batteries. Japan promotes reverse recycling, advocating that the people voluntarily strive to return used batteries to battery manufacturers and then hand them over to professional battery recycling companies for disposal.
In foreign countries, waste batteries are hazardous waste, and the holder not only cannot be used to sell money, but also needs to pay the battery recycling company for harmless treatment.
Umicore, a world-famous material company, the price of a battery recycling furnace is as high as 1 billion, which shows the high cost of recycling. Is it possible for any small workshop to do it?
However, Umicore can do it because developed countries attach great importance to environmental protection, and the holders of waste power batteries are willing to give Umicore money and jointly bear the cost of disposal.
Domestically, waste power batteries have not been included in the "hazardous waste list", recycling companies need to bid for the purchase of waste batteries at high prices, and it is painful!
Source: Compiled by the author
The policy guide noted the huge social cost of battery recycling and began to adopt a strict control attitude.
At the same time as the "white list", the mainland intensively introduced relevant policies for power battery recycling, put forward industry norms, from clarifying the main responsibility of car companies to recycling, carrying out battery recycling pilot work, establishing a traceability management platform, guiding the construction of recycling outlets, modifying industry norms to increase the application of cascade utilization enterprises, to encouraging cascade model innovation, and launching a series of guiding policies.
At least on the surface, the policy hopes to plug loopholes and prevent waste power batteries from flowing into the hands of enterprises that do not recycle and dispose of batteries in compliance.
But in terms of interest arrangement, the policy has not yet given a solution. Waste power batteries are still assets to be sold.
At the local level, recycling subsidies have emerged. For example, Shanghai has a direct subsidy for car companies to operate the cascade utilization business, and the recovery of a set of batteries is rewarded with 1,000 yuan; Shenzhen car companies are specially calculated according to 20 yuan / kwh.
However, from the central level, it will not subsidize battery recycling on a large scale like subsidizing new energy vehicles, and enterprises will also study more tax preferential policies, and make more efforts in process technology research and development to be self-reliant.
03
Technical route
Power battery standards are different, and there are many models, which brings difficulties to the cascade utilization and recycling of batteries.
Cascade utilization needs to be dismantled, tested, divided, and reorganized, mainly manual and semi-automated, and the technical essence of each company is not much different, so far it is mainly based on demonstration projects, and it is impossible to form scale benefits.
Recycling can be divided into pre-treatment and post-treatment. The pretreatment process is divided into discharge disassembly and live crushing, and then selects copper foil, aluminum foil, black powder, shell, diaphragm and other materials. Subsequent treatment includes high-temperature pyrolysis, hydrometallurgy, pyrocytic smelting, material restoration, etc.
Overview of the battery recycling technology route
The power battery recycling industry is still in the early stages of development, and there are countless recycling methods being studied, but they are nothing more than the above technical routes.
Under the current technical routes, the material recovery rate, industry norms require that the comprehensive recovery rate of nickel, cobalt and manganese should not be less than 98%, the recovery rate of lithium should not be less than 85%, and the comprehensive recovery rate of other major valuable metals such as rare earths should not be less than 97%.
Of course, the higher the recovery rate, the better. However, improving the recovery rate not only requires excellent technology, but also depends on the grade of the material in the pretreatment stage. Taking lithium iron phosphate batteries as an example, the lithium content of the crushed black powder market demand is greater than 2.5%, and it is best to reach 3.8%. The positive and negative electrode pieces are manually split, and the lithium content of pure positive electrode powder can easily reach the highest standard, while the lithium content after mechanical crushing into positive and negative mixed powder is basically below 3.0%.
This has led to the phenomenon of bad money expelling good money.
A large number of batteries are recycled by the "small workshop", manually disassembled into shells, copper foil, aluminum foil, black powder, positive and negative pole pieces are separated and finely disassembled, the material grade is high, and the price is considerable. There is no shortage of "regular army" bidding for batteries and outsourcing them to "small workshops" in poor and remote areas such as Guizhou and Jiangxi to dismantle and pretreat them before wet smelting and recycling materials.
Low-cost and high-value recycling is the advantage of "small workshops", manual dismantling and sorting of 1 ton of battery costs 600 yuan, less than half of the cost of dismantling and sorting of "regular army" equipment.
Of course, the price is sacrificed for the environment and personal health, and the gain is not worth the loss. I sincerely hope that the state will establish a supervision and management system measures as soon as possible to truly realize the harmless and orderly recycling of power batteries.
The technical route of power battery recycling is also evolving, because the technical route of power batteries has not yet been finalized.
In the early stage of development, nickel-metal hydride batteries, lithium manganese oxide, lithium iron phosphate, ternary lithium, lithium titanate and other batteries in power batteries have their own magic and have commercial applications. Later, lithium iron phosphate and ternary lithium batteries became the absolute mainstream with strong performance advantages. In 2018, with the decline of subsidies, the frequent occurrence of ternary battery safety accidents, the installed capacity of lithium iron phosphate gradually expanded, and there were early signs of surpassing ternary lithium. Until 2021, the share of lithium iron phosphate surpassed that of ternary lithium, which is the choice of the market.
Development continues.
It is expected that in the next 3-5 years, semi-solid-state batteries will begin to be applied on a large scale. In the next 10 years, solid-state batteries are expected to occupy a place.
Following these changes, battery recycling process technology and equipment will usher in greater challenges.
04
The business model needs to be improved
To establish a business model for power battery recycling, we must first have a good source of recycling.
The number is small but good to recycle, from the main engine factory can be recycled test car battery packs, a few, more than dozens, most of which have ladder utilization value. Individual vehicles can be directly recycled after violent experiments after the battery is burned or damaged.
In addition, the better source of goods is that the recoverable pole scrap from the battery factory, the unfilled liquid battery cell, the B product C battery cell, the battery PACK and so on. Pole sheet material market channels are stable, difficult to shake, B product C battery as a ladder use of batteries can be used for low-speed cars, two-wheeled vehicles, backup power supply, street lights, charging treasures, etc., the market demand is very large.
There is also a good source of goods is the bus company's retired new energy bus battery. This source of competition is fierce, and a batch of cars can be retired to recover hundreds of tons of lithium iron phosphate batteries. Recycling companies bid for batteries, depending on the year of battery production, brand, battery status, the price ranges from 100 to 200 yuan per kilowatt-hour of electricity. On-site manual dismantling and pulling back to the factory for testing and sorting, usually 80% can be used in cascades, and sold to cascade utilization enterprises or traders at a price of 200 to 300 yuan. Of course, the price of lithium carbonate continues to soar, battery-grade lithium carbonate has risen to 400,000 yuan / ton, and now the recovery price also considers the value of recycling.
The power batteries on the new energy vehicles scrapped by the automobile dismantling plant are even more sought-after. In 2018, more than 1,000 new energy vehicles were scrapped in the dismantling plant, 80% with batteries; in 2019, the automobile dismantling plant also recycled more than 1,000 new energy vehicles, and 80% of the vehicle batteries were dismantled and auctioned in advance. What's more, some traders sold a car of batteries, the buyer has not yet pulled on the highway, there are new buyers at a high price, staged a battery robbery war.
Before the real cascade utilization and recycling enterprises, there are also traders who shuttle between them.
Traders are good at back-to-back sales, find a source of batteries, ask about the status of batteries and price ranges and other information, on-site inspection and verification of goods to prepare for bidding, while looking for buyers. Waste battery purchases are cash transactions, payment to delivery, never in arrears, but what is earned is the difference. The most diligent salesmen even drive private cars along the street to sweep goods, repair shops, scrap factories, electric vehicle dealers are their frequent strongholds, go out for a day, trunk to pull two hundred kilograms of waste batteries is not uncommon, live high-risk occupation.
The "small workshop" recycling battery business is flexible and has many routines, which will not be described in detail here.
Although the "regular army" recycling can reach strategic cooperation with the main engine factory and battery factory, and some foreign-funded car companies will also provide battery treatment for free, the amount of recycling is limited, and the existing business model is still difficult to make a profit.
In order to lock the source of the battery in advance and recycle in batches, recycling enterprises began to lay out the power exchange business. Takeaway riders first used lead-acid batteries, often because they could not be charged in time and interrupted service, two-wheel electric vehicle power exchange mode solved this problem very well, taking the lead in commercialization and profit. The power exchange mode of new energy vehicles has been explored, and Wei is self-sufficient in building and replacing power stations, which is favored by users. Aodong has built a power exchange platform to provide battery replacement services for taxis, and some stations have already made profits. The power exchange mode reduces the cost of car purchase, solves the charging problem, improves the use efficiency, and is also conducive to the sustainable development of recycling enterprises.
In addition, in the battery recycling process, there are often encountered several tons of scattered batteries, not enough to fill a truck and transport back to the factory for processing, recyclers can choose to temporarily exist in the recycling network, save enough 30 tons and then use the 15-meter truck to pull away at one time. The Ministry of Industry and Information Technology has filed more than 10,000 power battery recycling service outlets. Self-built 1 outlet, the annual operating cost is about 300,000, it is difficult to make a profit. Therefore, cooperation and co-construction and sharing of recycling outlets are the hot spots for recycling enterprises to study.
05
Material prices are pulled by rising
The benefits of battery recycling are either cascading or come from the recycling value of materials.
Before 2021, recycling lithium iron phosphate batteries can be used in cascades, but losing money in recycling is a common phenomenon in the industry. Most companies are reluctant to recycle, and there have been hundreds of yuan per ton, or even free gifts, freight at their own expense.
At the end of 2020, the price of lithium carbonate is still at a historic low, and it will rise in 2021, soaring from 50,000 yuan / ton to 350,000 yuan / ton at the end of the year. As of February 17, 2022, the average price of lithium carbonate exceeded 430,000 yuan / ton.
As a result, the recycling price of waste lithium iron phosphate batteries has also risen, and the aluminum shell battery cell has been quoted from about 2,000 yuan / ton in early 2021 to 15,000 yuan / ton (excluding tax and excluding freight).
Obviously, if the price of materials continues to rise, it will pull the benefits of the power battery recycling business.
So what is the price trend of battery materials?
There are three main reasons for the rise in battery-grade lithium carbonate in 2021. First, the sales of new energy vehicles have doubled beyond expectations, the supply of foreign resources is insufficient, and domestic smelting enterprises cannot produce at full capacity. Second, the domestic salt lake lithium extraction capacity was affected by the reduction of production in winter, the equipment maintenance period and the hoarding at the end of the year, and the supply was reduced. Third, 52 percent of the world's proven lithium reserves are in Chile, and Chilean President Bolic won the election at the end of 2021, focusing on social change, promising to increase mining royalties and corporate taxes, and increased mining costs.
In addition, the momentum of new energy vehicles in 2022 is not reduced, and some experts predict that this year will achieve the goal of selling 5 million vehicles in 2025 ahead of schedule, and it is possible to impact 6 million vehicles.
Lithium battery energy storage is also developing rapidly, and the demand for lithium batteries in the future is likely to exceed that of electric vehicles. On the supply side of lithium carbonate, many new projects will not be put into production until the second half of 2023 at the earliest. Therefore, this year, the price of lithium carbonate will continue to rise and remain in the high range.
The global cobalt resources are concentrated, mainly in the Democratic Republic of the Congo (Dr. Kinshasa) in Africa. The mainland cobalt resources are very scarce, ternary lithium batteries mainly recover cobalt, nickel, and now the waste ternary soft pack battery cell (523 system) procurement price is close to 40,000 yuan / ton high price, is still the darling of recycling enterprises.
Cobalt, commonly known as "cobalt granny", the price fluctuated sharply cyclically, reaching a historical high of 680,000 yuan / ton in the first quarter of 2018, and then fell sharply, falling to 340,000 yuan / ton at the end of 2018. The main reason is that the growth rate of new energy vehicles has slowed down after May 2018, the demand has decreased compared with expectations, and since the second quarter, the production increase plan of cobalt ore has gradually materialized, and the supply has risen sharply. From 2019 to 2020, the cobalt price shock adjustment remained in the low range of 200,000-300,000 yuan / ton. In 2021, the demand for raw materials is tight, and the price of cobalt continues to rise to more than 400,000 yuan, and as of February 17, 2022, electrolytic cobalt has risen to 530,000 yuan / ton.
The Democratic Republic of the Congo (DRC) itself is a politically turbulent country, logistics capacity is not developed, fortunately, the share of lithium iron phosphate batteries is gradually expanding, and the application of 811 low cobalt system batteries has increased, and the demand for cobalt resources is not as urgent as lithium, and this year or will remain in the high range of 500,000-600,000 yuan / ton.
The price of recovering ternary battery black powder in the market is mainly calculated based on cobalt content, nickel content and cobalt price coefficient.
Cobalt is in the high range, the price coefficient is also high, and the recovery value of ternary cathode black powder has also increased accordingly, which is conducive to the development of the industry.
06
epilogue
In terms of policy, I hope that the state will establish a regulatory punishment mechanism, launch a waste power battery to be included in the "hazardous waste list" plan, and gradually implement the management of waste power battery recycling qualifications.
In terms of economy, the 2022 Beijing Winter Olympics will boost economic consumption and promote the development of new energy vehicles, especially the large-scale application of hydrogen fuel cell vehicles; more and more people recognize electric vehicles, especially young people, with huge purchase potential.
In terms of society, it is hoped that car companies will establish a battery recycling mechanism, or replace the old with a new one, guide individual user ownership batteries to be directly handed over to regular recycling enterprises to deal with, reduce middlemen links; the people themselves strengthen environmental awareness, and are committed to the harmless recycling of batteries.
In terms of technology, it is hoped that recycling enterprises will strengthen the research and development of process technology and equipment, pay attention to the development of power battery technology routes, plan research and development directions and priorities, and be committed to safety, environmental protection, refinement, and automatic recycling of overall solutions.
The main reason why the power battery recycling industry is interesting is the uncertainty of the value of waste batteries. Like "gambling stones", it is difficult to judge how much jade a stone contains and what the value of the jade is. Of course, experienced battery recyclers can use certain methods and tools to assist in analysis and judge the value of waste batteries as accurately as possible.
At the beginning of the new year, Vientiane is updated, I wish the power battery recycling enterprise Tiger Xiaofeng to take advantage of the times, and create the future with gold and jade!
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