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Will the retired electric vehicle battery that everyone refuses to talk about is a good business at the level of 100 billion?


Author丨Wang He


Time draws back to 2004. When Professor Xu Kaihua, the founder of GEM (Shenzhen GEM High-Tech Co., Ltd.), returned to Jingmen, not far from his hometown in Hubei, to start his own business with the first prize of Guangdong Science and Technology Progress Award, people would never dream. I thought that Xu Kaihua used a small waste battery to recycle, which opened the prelude to the battery recycling industry and also started the black-and-white battle between the “regular army” and the “guerrilla”.

“Car owners cannot find or are not sure whether the recycling point is formal or not. Some power batteries recycled from traditional 4S shops and other channels also flow into small workshops.” Yu Puritan, secretary general of the Zhongguancun New Battery Technology Innovation Alliance and chairman of the Battery Hundreds Association In an interview with Chuangyebang, he revealed the inside story of the industry.

The business of “small workshops” is booming, while the supply of retired batteries in 4S stores of regular car companies is constantly losing. This makes people wonder whether battery recycling and cascading use of electric vehicles is a good business?

In the face of a large amount of goods flowing into the black market, formal enterprises are forced to trade with “small workshops”. As the leader of domestic new energy vehicle battery recycling, GEM Chairman Xu Kaihua warned new players in the battery recycling industry:

“Don’t come in, it’s a waste of money. Only the top five in the industry can survive.”

However, investors don’t think so. Just last month, Bocui Cycle, a power battery recycling solution provider, has just completed tens of millions of Pre-A rounds of financing, and Lanchi Ventures has made an exclusive investment.

At present, the investment circle is paying too much attention to the battery recycling track. In fact, the capacity of the industry that has been approved for construction has exceeded the battery capacity. “The person in charge of a battery recycling company said.

Why everyone refuses to talk about battery recycling

Industry giants have invested huge sums of money, investors and entrepreneurs are gearing up, coupled with national policy support, it seems that it is only a matter of time before the battery recycling industry becomes the next outlet.

According to data from the China Automotive Technology Research Center, the total number of domestic power batteries retired in 2020 will exceed 200,000 tons (about 25GWh). Where did the 200,000 tons of retired batteries go?

However, when the reporter visited a number of car companies, power battery companies, and battery recycling companies, they found that most companies avoid battery recycling, and new outlets in the 100-billion-level market have even become “taboos.” As a leading company in the field of new energy vehicles in China, BYD has launched the layout of power lithium battery recycling very early. At present, BYD’s battery recycling channels mainly entrust authorized dealers to recycle used power batteries. When there is a customer’s request or when a scrapped vehicle needs to replace the power battery, the dealer will take out the power battery and transport it to BYD Baorong factory for preliminary inspection. If the used batteries can be reused and continue to be used, the used batteries will be further tested at the Baorong factory. These batteries will continue to be used in the field of home energy storage or base station backup power in the future. The reporter wrote to BYD, but the other party was unwilling to reply. Yu Qingjiao stated that in terms of battery recycling ecology, at present, car companies, battery recycling companies and battery manufacturers have not yet formed a unified pricing for battery recycling, and the recycling business model is not perfect. Car companies “peek-a-boo”, power battery manufacturers and battery recycling companies have also played “Tai Chi.” “We have communicated with the relevant departments of battery recycling and will not accept interviews this time.” The relevant person in charge of AVIC lithium battery told reporters. Qingyan, who has had technological innovations in the echelon utilization of power batteries, also said that the relevant person in charge also said that it can only provide an introduction to its battery echelon utilization technology. As for the business model and pricing model of battery recycling, it is inconvenient to answer. “Enterprises have avoided talking about the recycling and utilization of decommissioned power batteries, and they are less motivated. The main reason is that the technical route of battery cascade utilization is not clear.” said Lin Boqiang, dean of the China Energy Policy Research Institute of Xiamen University. The energy storage path, what direction it will take in the future, and whether it is economical, requires both government supervision and government policy support. According to the calculations of Battery China.com, it is estimated that by 2025, the recycling value of power batteries produced in the two directions of cascade utilization and recycling will exceed 50 billion yuan; its potential market value may exceed 100 billion yuan in 2030. The industry is waiting for the “wind.” However, the recycling channels of many formal and qualified enterprises are not smooth, and a large number of retired power batteries flow into the black market. Some formal battery recycling companies even have to cooperate with black market vendors to purchase batteries from the latter to maintain the operation of the factory’s machinery and business promotion. This has undoubtedly contributed to the prosperity of the black recycling market. While pushing up the purchase price, it has also increased the difficulty of making profits for formal recycling companies. “One is because the number of companies is small and the coverage of outlets is limited; the other is that small workshops often use the banner of’high-price recycling, on-site recycling’ to obtain more waste battery resources.” Yu Qingjiao said. Due to technical problems in small workshops, the recovery rate of effective ingredients is not high, and there is a serious problem of waste pollution. The market is still in a period of disorganization, and it is difficult to guarantee the profitability of recovery. “Small workshops” generally have several treatment methods after recycling the batteries. Among them, the most common is to disassemble the battery and extract precious metals such as cobalt and lithium for sale. The price of non-renewable cobalt metal reached more than 600,000 yuan per ton when the price of non-renewable cobalt metal was the highest. In addition, the “Small Workshop” will sell the batteries to low-speed electric vehicles, electric bicycles and other echelon utilization areas not advocated by countries after recycling, causing great hidden dangers to the driving safety of the latter. “Batteries are taken from the black market. The source of waste battery materials is very poorly consistent. There are batteries of all types and types. This poses a big challenge to engineering design and project operation. Some foreign countries’ compliance with waste The collection is well classified, which will reduce the difficulty and cost of later collection, storage, and transportation.” Lin Xiao, founder and CEO of Bocui Cycle, told Chuangyebang. Yu Qingjiao pointed out that the current policies and regulations are still in the exploratory period. Although they have released a clear signal to support battery recycling, there is no real system formed, especially the circulation legal system. Second, traceability management and other regulatory mechanisms need to be strengthened to guide the upstream and downstream of the industry chain to strengthen battery recycling collaboration. “The first is the unblocking of recycling channels. Car companies in my country assume the main responsibility for power battery recycling. Recycling companies need to strengthen close cooperation with car companies, and strengthen battery life cycle traceability with battery companies to reduce recycling costs; secondly, through technology Innovate, increase material recycling rate, and increase recycling revenue.” Yu Qingjiao believes that the battery recycling industry is still in the early stages of development, and scale is also a key factor affecting profitability. The state should guide, regulate, supervise and provide financial support. Is battery recycling a good business? Although the recycling channels of decommissioned batteries need to be improved, and the material recycling rate and recycling efficiency of batteries need to be improved, some companies have already begun to deploy battery recycling business and have gradually become the industry’s leading company. Bangpu Cycle is one of them. “The constant has something.” Directly in front of the desk of Li Changdong, the founder and general manager of Bangpu Cycle, hung these four Chinese characters written in seal script. In Li Changdong’s eyes, Bangpu recognized the battery recycling, and it lasted 16 years, which is the best explanation of these four characters. In 2001, Li Changdong served as the production plant manager at Highpower Battery Factory. At that time, most people only focused on the front-end production of the battery and the intermediate consumption link, and the recycling link was often regarded as “garbage picking” and “recycling tatters.” Li Changdong found that the profit of battery production is getting lower and lower, and the scraps and defective products generated in the battery production process are also difficult to deal with. Handing over to the Environmental Protection Agency for processing will require a huge processing fee, and failure to pay will result in substandard emissions. “Can these battery waste be recycled for subsequent recycling?” This idea often appeared in Li Changdong’s mind. So he quit his job in the battery factory and raised 500,000 yuan with his partners. In 2005, Bangpu Recycling was formally established, with Li Changdong as the general manager, focusing on the recycling business of consumer lithium batteries. In 2008, the promulgation of the “Circular Economy Law” provided policy support for the development of talents and technology for battery recycling companies such as Bangpu. More and more scientific research institutions and talents are paying attention to battery recycling. In 2011, Li Changdong decided to further expand the scope of battery recycling business. He began to focus on power batteries from consumer lithium batteries to extend the battery recycling industry chain. Source: Bangpu Cycle At present, Bangpu has formed four major industrial sectors: battery recycling, automobile recycling, minerals and new materials, specializing in the recycling and processing of power batteries (power batteries for electric vehicles), gradient energy storage utilization; traditional scrap car recycling and dismantling, and key components Remanufacturing; and the provision of industrial production and commercialized recycling service solutions for high-end battery materials and automotive functional bottleneck materials. In 2015, in order to develop a circular economy and form an ecological closed loop, CATL acquired Guangdong Bangpu Cycle, realizing a circular industrial chain integrating R&D, production, sales, and recycling. Bangpu Cycle has now become China’s largest recycling base for used batteries. In September 2018, the Ministry of Industry and Information Technology announced the first batch of “whitelists” of enterprises that comply with the “Industry Standards and Conditions for Comprehensive Utilization of Waste Power Batteries for New Energy Vehicles”. Five companies including Bangpu Cycle, GEM, Huayou Cobalt, Highpower Technology, and Guanghua Technology were selected. However, from 2017 to 2018, the battery recycling market is still in its infancy. The relevant person in charge of Ningde Times told Entrepreneurship that the number of retired power batteries from 2017 to 2018 was relatively small, and the types and regional distribution were concentrated. About 17,000 new energy vehicles produced during the “Ten Cities and Thousand Vehicles” period are the mainstay. The decommissioned power batteries are about 27,200 tons (1.22GWh), of which about 95% are lithium iron phosphate batteries. From 2019 to 2020, buses, rental and other operating vehicles that entered the market in the early stages have reached the mandatory scrapping period. Early private user vehicles have begun to choose complete vehicle scrapping due to factors such as the decline in power battery performance, the lack of spare parts for old batteries, or the high replacement cost. Retired. Starting in 2020, my country’s power batteries have begun to enter a wave of large-scale decommissioning. During the period 2021-2025, my country’s new energy vehicles will enter a stage of rapid growth. New energy vehicles that entered the market in 2014-2018 will enter a period of obsolescence. With the continuous expansion of the scale of decommissioned power batteries, some people believe that the use of cascades should be increased to maximize the effectiveness of decommissioned batteries. Some people also believe that as battery prices continue to drop, the cost advantage of cascading utilization will gradually disappear or even hang upside down, and it should be directly recycled. The 2020 battery survey report released by Bloomberg New Energy Finance shows that by 2030, battery prices may exceed 58 US dollars (about 370 yuan) / kWh, and the use of solid-state batteries will accelerate the process of battery price reductions. By then, the battery cost will even be lower than the cost of cascading utilization. “It needs to be divided into different situations, mainly with technical support, able to accurately detect the condition of retired batteries, select batteries with better battery performance (safety, cycle life, energy density, etc.), and use them in cascades, which is more economical; Those with poor performance are directly recycled to avoid hidden dangers such as safety.” Yu Qingjiao said. Three problems of power battery recycling At present, the power battery recycling model has two major trends, one is echelon utilization, and the other is recycling, dismantling and recycling. Echelon utilization is the dismantling and reorganization of used batteries and re-applying them to energy storage power stations, low-speed electric vehicles, small electrical appliances and other fields that do not require high energy density. It is mainly suitable for lithium iron phosphate batteries with longer life and more stable performance; Recycling is the extraction of valuable metal materials from waste batteries, which is suitable for ternary lithium batteries containing expensive metals such as cobalt and nickel. The recycling of lithium iron phosphate batteries faces the problem of poor economy. Echelon utilization is still in the stage of trial and exploration. The main reason is that the battery specifications and models produced by various manufacturers are different, which makes it difficult to recombine. The battery materials used by each manufacturer are different, and the battery life is different; the battery performance of each manufacturer is different, and the combination Later security is more difficult to guarantee. The relevant person in charge of the Ningde Times pointed out that the economic value of cascade utilization at the current stage is still low, and further technical and industry standards are still needed. The recycling and dismantling can be said to have formed a certain scale, whether it is from the national policy or the market scale, we can get a glimpse of its trend. Although both are positive trends, the problems they face are also extremely challenging. The current battery recycling industry is facing three problems in process technology, policy and profitability. The first is process technology. Whether it is echelon utilization or dismantling and regeneration, they are facing severe barriers. The current biggest obstacle to echelon utilization is the remaining battery life and performance evaluation. In general, the recycling technology is relatively mature, but key technologies and equipment such as the efficient extraction of valuable metals need to be upgraded, and the level of pollution prevention and control in the dismantling and treatment of waste power batteries needs to be improved. At present, hydrometallurgy and physical repair methods are the main technologies for the recycling of used power batteries. The comprehensive recovery rate of metal elements such as nickel, cobalt and manganese in hydrometallurgy can reach 98%. The second is the policy aspect. At present, relevant departments have successively issued systems and regulatory documents that guide and support the development of the industry, and have sorted out a clearer direction for battery recycling. However, how to further effectively manage, rationally build a power battery recycling system, effectively implement full life cycle traceability management, and guide the upstream and downstream entities of the industry chain to fulfill the responsibility of power battery recycling requires the government to consider the market and industry. Planning and overall planning. In 2018, the Ministry of Industry and Information Technology issued the “Interim Measures for the Management of Recycling and Utilization of Power Batteries for New Energy Vehicles”, which for the first time clarified the responsibilities of automobile companies, battery companies, and comprehensive utilization companies in the recycling process, and pointed out that automobile manufacturers bear the main responsibility for power battery recycling. Perform corresponding responsibilities in all links of power battery recycling to ensure the effective use and environmental protection of power batteries. Finally, it is difficult to make profit. At present, the batteries that have really entered the scrap stage are still the earliest batch of batteries when new energy vehicles first entered the market. The number is not that large. Among them, lithium iron phosphate batteries account for a larger portion, which is more suitable for cascading use. In terms of economic benefits, recycling and dismantling The benefit is not high. In contrast, ternary lithium batteries have greater recycling value. But the reality is that it will take time for the ternary battery decommissioning flashpoint to arrive. Currently, the retired power batteries on the market are mainly lithium iron phosphate batteries. Because they contain less precious metal elements, the recycling value of lithium iron phosphate batteries is not high. However, due to its good safety and long service life, it is suitable for cascading utilization. The ternary lithium battery contains rare metals such as nickel and cobalt, so it has a high recycling value. According to the current technical level of ternary lithium batteries, the capacity density of power batteries commonly used in electric vehicles is 260Wh/kg. According to this energy density, at 20,000 kilometers a year, calculated based on shallow charge and shallow discharge, the cycle life is at least 1,000 times . If used properly, it can be used for at least 5 to 8 years on an electric vehicle. In the battery recycling industry, several leading companies have formed a certain scale of regeneration processing capacity, and their technical routes are in a stage where a hundred flowers bloom. Relying on its subsidiary Bangpu Cycle, CATL has created an ecological closed loop of “battery production→use→cascade utilization→recycling and resource regeneration”. Bangpu Cycle will uniformly process the recycled power batteries for electric vehicles. First, the battery modules are completely discharged, the battery cells are separated, and then sorted. After testing and evaluation, disassemble the batteries that do not meet the echelon utilization. Disassemble and separate components such as the positive electrode, negative electrode, electrolyte and diaphragm, and then leaching and removing the electrode material, and then prepare the scrapped power battery into the precursor of the power battery positive electrode material through processes such as ion exchange, precipitation, and adsorption. . Bangpu’s existing capacity for processing waste batteries exceeds 120,000 tons per year, and the total recovery rate of core metal materials for battery products has reached 99.3%. Due to the continuous decrease in the cost of lithium batteries in recent years, the annual report shows that CATL’s revenue of lithium battery materials in 2020 is 3.429 billion yuan, a year-on-year decrease of 20.35%. Source: Grammy As one of the leading companies in the domestic battery recycling industry, GEM’s power battery recycling business only began to make a profit in 2019, three years after the initial production. GEM’s advantage lies in the start of the recycling and utilization of waste batteries. It has accumulated 20 years of experience. In addition, it also has industrial layouts such as home appliance recycling and end-of-life automobiles to play a synergistic role to drive the recycling of power batteries. At present, the flourishing business model and technical route of battery recycling make the future market prospects still confusing, and it is still unknown whether it can effectively solve the pain points of the industry. From the perspective of business models, the current battery recycling is more dependent on other businesses, the tiered utilization is mainly dependent on energy storage, two-wheeler PACK plants or battery factories, and the recycling is dependent on the hydrometallurgical plant. If a company survives only on ladders or regenerative businesses, it may lose money. “How to do the most effective echelon utilization, as the scale of retired power batteries in the market becomes larger and larger, the technical route will gradually become clear.” Lin Boqiang told Chuangyebang. Where are the opportunities for entrepreneurs? Behind the black-and-white war between the “regular army” and the “guerrilla”, a group of start-up technology companies in the battery recycling industry are quietly emerging. In 2019, Lin Xiao, Ph.D. and senior engineer of the Chinese Academy of Sciences, established Bocui Cycle to provide a full set of solutions for battery recycling. According to Lin Xiao, due to the domestic garbage embargo, the issuance of the European mandatory battery law, and the accelerated deployment of battery recycling, ESG and other industries abroad, it is hoped that new links in the power battery industry chain will achieve a strong East Asian power battery manufacturer. breakthrough. The company’s overseas customer demand exceeds expectations, accounting for more than half. The obsolescence cycle of domestic power batteries is also very urgent. As of 2020, domestic new energy vehicles have sold more than 1 million units for three consecutive years, and 900,000 units have been sold in the first May of 2021. “Three years ago, the first batch of electric vehicles with an annual sales of one million units was calculated based on the service life of 5-8 years, that is, 1 million vehicles would be scrapped in two years at the earliest, and the battery pack of each vehicle was calculated at 400~500 kg. Therefore, in the next three years on the market, more than 500,000 tons of waste batteries will be scrapped every year. This amount is actually quite large, and the recycling market needs to be prepared.” Lin Xiao said. In the battery recycling market, everyone hopes to have mature technology and equipment solutions that can be quickly replicated and promoted. If a national processing capacity of 500,000 tons needs to be built in three years, at least 100,000 tons will have been running well in two years. Production capacity, and there are 2-3 kinds of technical routes to choose from, it is possible to achieve five-fold expansion within a year. In other words, one year later, there will be at least 20,000-30,000 tons of mature technology and production lines that can be replicated for battery recycling. In addition, the ratio of “paper-based recycling capacity” and actual battery output is seriously out of balance, which is also a big “blocker” in front of start-ups. In Lin Xiao’s view, the battery has entered the obsolescence cycle for more than five years, leading to a large paper production bubble in the battery recycling industry. “For investors, many of the leading companies that are currently being recycled, such as whitelisted companies, have already been listed or do not need financing. At the same time, paper production capacity is too high and supply exceeds demand. The opportunity for entrepreneurs is that there are still No company can really do this well, and there are still opportunities to try innovation and breakthroughs, although many companies may be eliminated, just like the development of the lithium battery manufacturing industry chain in the past few years, from the hills to the top.” Lin Xiao pointed out. The business opportunities that will be generated in the field of battery recycling need to be paid attention to also include the realization of material regeneration through battery recycling, thereby realizing the closed loop of the industrial chain, and changing the existing industrial structure and profit distribution. The technical direction of recycling will gradually move closer to battery materials, because in essence, battery recycling is a collection of resource collection and material recycling. There will also be many new variables in the collection channels of battery materials and the direction of the material recycling industry. For example, after the battery exchange mode, the requirements for recycling channels will become weaker, but it will give rise to another industry demand, such as battery exchange equipment and batteries. Asset management, etc., and whether it is possible to directly recycle used batteries at the grid swap point. There will also be many new variables in the collection channels of battery materials and the direction of the material recycling industry. For example, after the battery exchange mode, the requirements for recycling channels will become weaker, but it will give rise to another industry demand, such as battery exchange equipment and batteries. Asset management, etc., and whether it is possible to directly recycle used batteries at the grid swap point. “We think that battery recycling will definitely have great technical and market demand. It is just the beginning. This is a big track where few Chinese companies can lead the way from the beginning. It is different from the chip, lithium battery manufacturing and other industries starting from the beginning. , We can take a different development path. Once we can continue to lead the recycling technology and industry at home and abroad, and close the new energy industry chain, we can open up basic industries such as energy, resources, materials, and transportation.” Lin Xiao said. Under the wave of global electrification, the prospect of battery cascade utilization and recycling is beyond doubt. “It’s only a matter of time before the market scale exceeds tens of billions, hundreds of billions, or even trillions of dollars. As the industry chain matures, some high-quality companies will definitely be nurtured.” According to Puritanism, despite the bright future market prospects, battery recycling still lacks uniform pricing, the recycling business model is not perfect, and “small workshops” are rampant, battery recycling is still a game among leading companies. “Without recycling sources, this business is not your turn.” “At present, for entrepreneurs, the business model of battery recycling is very important. After all, it needs to be profitable. However, it is not ruled out that some companies can make the capital market pay, but at least there must be some visible business models before the capital market is willing to pay. “Lin Boqiang said to Chuangyebang. For entrepreneurs, everything is still full of variables