How China is building the next big green industry: battery recycling

The economic and climate implications of China’s scrappage policy are enormous, and China’s efforts should be closely watched globally: this is an issue that many countries racing to electrify their vehicles will inevitably face themselves.

First, because batteries make up almost half of the price of an electric car, many car owners may decide to buy a brand new car when the battery needs to be replaced, said Shen Xinyi, a researcher at the Center for Research on Energy and Clean Air, a Helsinki-based think tank, told me. And because each vehicle typically contains about 900 kilograms of steel, recycling car bodies can increase the supply of scrap metal, which can be reused to produce steel with lower CO2 emissions, Shen added.

But the real trash-to-treasure story is in the used EV batteries. And all signs point to a lucrative market emerging, with market leaders already emerging.

Most simply, old batteries can be reused to power other products. However, their real value lies in the materials: lithium, cobalt and nickel, which can be removed and reused. On average, the battery minerals in each EV are worth as much as $1,700, BMW’s sustainability chief recently told Reuters.

This ‘black mass’ – crushed and fragmented battery cells – could also help countries tap into a new source of strategic minerals. According to a recent study, China is expected to be the first country in the world to meet all its demand for key battery materials by recycling them from used materials.

And the companies that want to dominate the sector are already emerging. One of these is GEM, or Green Eco Manufacture, which claims to process about 10% of all EV batteries used in China. Automakers including BYD and Geely have also invested in battery recycling subsidiaries.

GEM was founded in 2001 by Xu Kaihua, a professor turned entrepreneur who founded what is now a recycling empire in Shenzhen by specializing in extracting nickel and cobalt from digital waste, according to the Changjiang Times. He ventured into EV battery recycling in 2012 after acquiring a cobalt processing company and quickly mapped out a circular business model that includes battery recycling, mineral extraction and battery manufacturing. GEM reported record sales of 30.5 billion yuan ($4.2 billion) for 2023, cementing Xu’s position as the “king of bullshit,” a nickname he is proud of.