Due to the lifespan of vehicle batteries, the industrial ramp-up of battery recycling lags behind the expansion of battery cell production by about ten years. The current development phase of the recycling industry is therefore crucial: companies must further develop their processes, logistics, and business models so that they can keep pace with rising volumes and a growing variety of vehicle batteries. Regulatory requirements such as minimum recovery rates, recycled content in new batteries, and extended producer responsibility further increase the pressure to act.

“To remain competitive during the scaling phase after 2030, recycling companies must use the current development phase to optimize their processes, reduce costs, and develop viable business models,” says Prof. Dr. Simon Lux, director of the Fraunhofer FFB and co-author of the study. “Close collaboration with automakers will be crucial in this regard to gain early access to battery returns and prepare for future technological developments.”

Two Phases of Industrialization

According to the study, in the coming years the recycling industry will be shaped primarily by production waste from the ramping-up battery cell manufacturing as well as established cell chemistries based on lithium-nickel-manganese-cobalt oxide (NMC) and lithium iron phosphate (LFP). About 70 percent of current recycling volumes come from such production waste. Suitable recycling technologies for these battery generations - namely pyrometallurgical and hydrometallurgical processes - are already available. The focus now is on scaling up their application in a cost-effective manner. To achieve this, processes for take-back and pretreatment must become more efficient, more standardized, and further automated.

Starting in 2030, however, the situation will change significantly. Researchers anticipate a high volume of return materials: About 60 percent are expected to come from end-of-life vehicle batteries and other return sources outside of production. Unlike production waste, these batteries vary more widely in terms of age, condition, cell chemistry, cell format, and system design, which leads to additional requirements for analysis, sorting, deactivation, and disassembly during recycling.

Innovative cell chemistries, in particular, require adjustments to recycling processes. In addition to today’s lithium-ion batteries, sodium-ion and solid-state batteries will also become part of the return streams in the future. “Sodium-ion batteries can generally be integrated into existing process chains, but they require adapted and, if possible, separate material streams,” explains Hannah Mittag, a research associate at Fraunhofer FFB. “Solid-state batteries, however, with their new materials and cell designs, bring fundamentally new safety and recovery concepts to recycling.”

Seven Trends for Economically Viable Battery Recycling

A key finding of the study is the strained economic situation faced by many recyclers: particularly for cobalt- and nickel-free chemistries such as LFP or sodium-ion batteries, processing costs often exceed the value of the recovered materials. The study’s authors identify seven key development trends that can improve the economics of recycling and support the transition to a fully circular battery industry. These include battery designs optimized for recycling, the use of second-life applications, the standardization of take-back logistics, and the optimization of recycling processes. Another trend involves a division of labor between regional pretreatment and centralized material recovery, the development of markets for secondary materials, and more integrated business models along the value chain.

“Our study shows that recycling companies must use the current ramp-up phase to optimize processes, reduce costs, and position themselves for the full-scale rollout phase after 2030. Early collaboration with automotive OEMs will be crucial to securing material flows and remaining competitive,” summarizes Hannah Mittag.

Overview of the seven development trends in vehicle battery recycling

• Battery design optimized for recycling: Standardized mounting systems, modular architectures, and removable adhesives simplify disassembly, reduce costs, and improve safety.
• Second-life use of batteries: Reusing vehicle batteries in stationary storage systems or other applications can generate additional value and strengthen the circular economy.
• More efficient take-back logistics: Standardized packaging and transport systems, combined with regional collection centers, reduce logistics costs and improve the safe handling of end-of-life batteries.
• Optimization of recycling processes: Automating disassembly reduces labor by 50-80 percent. Specializing in homogeneous material streams increases recovery rates and lowers process costs.
• Specialized value chains: Decoupling mechanical processing from downstream steps enables improved cost structures and more efficient process structures.
• Markets for secondary raw materials: As battery chemistries increasingly shift toward systems with lower metal value, tapping into downstream markets for secondary materials is becoming essential.
• New business models: Closed-loop systems, OEM-owned recycling, second-life applications, and producer responsibility organizations (PROs) are transforming recycling from a standalone service into a strategically embedded function with more stable profitability and secure raw material flows.