Deloitte: Battery Supply Chain Sustainability is Evolving
In 2024, over 17 million electric vehicles were sold globally, marking a 25% rise compared to 2023.
Each of these vehicles contains a lithium-ion battery (LIB), which has a significant environmental footprint.
The extraction of lithium and other materials used in their production can result in deforestation, soil erosion and water contamination.
The disposal of LIBs can also release harmful chemicals into the soil, water and landfills, posing a fire risk at landfill sites.
According to the Institute for Energy Research, 98.3% of LIBs end up in landfills.
A report from CAS, a division of the American Chemical Society and Deloitte suggests that recycling could help address many of these issues.
"This in-depth report showcases the powerful synergy of Deloitte's market insights and CAS unmatched scientific data and technical expertise,” says Manuel Guzman, President of CAS.
“Through this collaboration, together we aim to accelerate breakthroughs on critical global challenges, such as sustainable energy and enable innovators across industries to make more confident business decisions."
The role of regulation
The report highlights that increasingly stringent environmental regulations are a key driver of the global battery recycling market.
Governments across the globe are introducing tougher measures, including Extended Producer Responsibility (EPR), hazardous waste management guidelines and end-of-life requirements for batteries.
These policies are designed to address safety concerns and ensure the recovery of valuable materials, fostering a circular economy.
The European Union’s comprehensive "cradle-to-grave" regulations set ambitious lithium recovery targets and require digital product passports for batteries to enhance transparency and traceability.
China has also taken proactive steps, enacting policies that cover the full LIB lifecycle.
Impact on LIB supply chains
In addition to regulatory pressure, the automotive industry itself plays a significant role in driving the push for battery recycling.
Automakers are facing growing scrutiny from regulators, investors and stakeholders to reduce their carbon footprints.
As the production of LIBs contributes significantly to an EV's overall manufacturing emissions, recycling is increasingly vital for decarbonising the supply chain.
Major automotive OEMs are incorporating recycled materials into their batteries and investing in closed-loop recycling systems to reduce their environmental footprint.
What must change?
The report identifies technological innovation as a crucial factor in revolutionising the battery recycling industry.
"We are pleased to develop and provide industry insights and solutions based on CAS scientific data,” adds Kevin Guo, Deloitte China National Industry Programme Leader.
“Science and technology innovations have made remarkable progress in multiple fields, and Deloitte China looks forward to continuing to work with CAS to make a significant impact on the industry."
Existing facilities currently have a combined capacity of around 1.6 million tonnes per year, a figure expected to surpass 3 million tonnes with the addition of planned sites.
Hydrometallurgy and pyrometallurgy continue to dominate recycling processes, yet digital innovations such as digital twins, blockchain and AI are reshaping the industry.
These technologies enhance material traceability, streamline recycling processes and boost overall efficiency.
Collaboration plays a vital role, with material suppliers, EV manufacturers and recycling firms working together to develop closed-loop systems and drive advancements in recycling technologies.
The report highlights that achieving profitability in battery recycling requires aligning technologies with material value, reducing costs through automation and capitalising on economies of scale.
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