Getting to 2030: What battery recycling companies must do to survive

For the US to meet its ambitious goals for domestic battery production, over 1,000 GW of capacity will be required by 2030, representing a 7x growth from 2023. Battery recycling companies are positioning to close the loop and support this demand, but they need to dig deep to overcome the frictions that will continue to be a drag to more efficient operations if left unaddressed. Using the case study of a fictional battery recycling company called RecyclePlenty, through the lens of Dele, its visionary founder, we’ll go through her challenges and the frictions that arise at each point, using a simple framework that other battery recycling companies can adopt.

Five years ago, Dele had built enough forecasts to be convinced that US battery manufacturing industry would need over 1,000 GW of capacity by 2030. She also posited that due to the brewing tension between China and the west, the US’ dependence on China for critical battery materials would eventually need a reworking, opening up a huge supply chain opportunity. This was part of the motivation that drove Dele to create RecyclePlenty, a recyling company poised to support local manufacturing of batteries in the US by providing raw materials from spent batteries.

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RecyclePlenty’s circular economy

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Fast-forward to 2024. Though her hunch was right, and there have been plenty of tailwinds (e.g., favorable government actions, private sector investment in the industry, shifting manufacturer preferences), there is still a long way to go: Even though RecyclePlenty now has a presence in the market, they need to stay in business long enough for the expected boom in the recycling industry. Navigating her way to 2030, Dele continues to encounter diverse frictions with the different stakeholders in the adoption and transition to a circular economy.

Friction with OEMs: Inertia needed to acquire the new capabilities and supply chain relationships

• OEMs need to develop new supply chain relationships to integrate recycled battery materials into their workflow. The pace of their adoption is dependent on the availability of scrap batteries entering the recycling stream.

Frictions with Battery Testers: Inertia to learn the new capabilities required

• Battery testers must develop brand new capabilities to help the industry handle the influx of end-of-life batteries. They have a bit more time to adapt, but adoption is quite disjointed across the industry.

Friction with Collectors: Frustrations related to locating facilities & permitting

• Collectors may be concerned about where to locate their new facilities that account for the increased risk with handling li-ion batteries, while navigating the permitting process. This could slow down their ability to rapidly scale.

Friction with Miners: Potential frustrations related to recycling restricting market access

• Miners may see battery recyclers as a potential threat to their business, but this is unlikely to have a significant public impact due to the large growing opportunity and need for climate friendly solutions.    

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At this point, Dele realized that she needed to reduce the potential impacts of these interruptions as a critical step to the next phase of RecyclePlenty. She knew there was a lot of potential trapped within what they had built so far. To ensure her leadership team stayed focused, she brought in a consultant to help her assess the situation, starting with a workshop to identify the sources of friction.

• Approach: A full friction analysis between RecyclePlenty and their stakeholders uses a framework that evaluates inertia (how quickly?), effort (how difficult?), reactance (are they onboard?), and emotion (how do they feel?):

With all her functional leads participating, they found that the collectors, OEMs, Battery testers, and battery manufacturers saw the most friction due to how quickly they are expected to develop these new capabilities and infrastructure (inertia), and the effort required to accomplish the ramp-up.

• Inertia: OEMs, battery testers, and battery manufacturers experience the highest frictions due to how quickly they are expected to develop new capabilities. Collectors come next as they require new infrastructure to serve a rapidly growing market
• Effort: Collectors, OEMs, battery tester, and battery manufacturers all must develop new capabilities and capacity to provide mature solutions to the burgeoning industry.
• Emotion: Collectors and miners don’t seem to be thrilled with the aggressiveness of the situation, even though they have critical roles to play.
• Reactance: Most stakeholders are onboard, but OEMs, battery manufacturers, and miners seem to have largely been brought in at the launch phase of most deployments which means they have to learn new behaviors fast which isn’t always pretty

Leveraging this discovery, Dele determined she needed to assemble a working group of collector, OEM, battery tester, and battery manufacturer, miner and industry standards creator’ stakeholders who would help anticipate and overcome obstacles as they occur.

She also refined RecyclePlenty’s core objectives and operating model with her leadership team to make sure expectations were clear and instilled throughout the company.

Solution:

1. Establish a task force with stakeholders but first align on interests separately:

• RecyclePlenty will initiate separate discussions with each stakeholder group (collectors, OEMs, battery testers, miners) to understand their individual concerns, interests, and priorities regarding battery recycling.
• These discussions will aim to find common ground and identify areas of potential collaboration.
• Once a basic level of alignment is achieved, RecyclePlenty would then form a joint task force comprising representatives from each stakeholder group.
• This task force can then work collaboratively to address shared challenges, develop industry-wide solutions, and advocate for supportive policies.

2. Align with industry trends:

• RecyclePlenty to actively participate in industry associations and forums to stay abreast of the latest technological advancements, regulatory developments, and market trends in the battery recycling sector.
• By aligning internal standards with the broader industry direction, RecyclePlenty can position itself as a leader and gain credibility among customers and partners.
• This alignment also helps to ensure that the recycled materials produced by RecyclePlenty meet the evolving needs of battery manufacturers and other end-users.

3. Focus on customer value and cost impacts:

• RecyclePlenty to prioritize understanding the specific needs and requirements of its customers, primarily battery manufacturers.
• This involves engaging in open communication to identify the desired quality, purity, and format of recycled materials.
• By tailoring its processes and outputs to meet customer demands, RecyclePlenty can enhance customer satisfaction and loyalty.
• Simultaneously, RecyclePlenty must carefully analyze the cost implications of each step in the recycling process to optimize efficiency and maintain competitive pricing.

4. Allow industry groups to manage policymakers:

• RecyclePlenty must recognize the importance of industry-led initiatives in shaping policies and regulations related to battery recycling.
• By actively participating in and supporting industry associations, RecyclePlenty can contribute to the development of effective and balanced policies that foster the growth of the recycling sector.
• This approach allows the industry to present a unified voice to policymakers, ensuring that regulations are practical, feasible, and supportive of innovation.

With this in place, Dele knew she had put together an agile and responsive team that was poised to overcome any challenges in the future. She is confident that RecyclePlenty would be a top 3 recycler by 2030.

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