Changing Times: Is the Auto Recycling Industry Willfully Avoiding EVs & Hybrids? 

Mar 1, 2022 | Industy

By Chad Counselman

As more and more of these vehicles are being sold, we MUST embrace them, learn about them, find outlets for their components, and provide opportunities for reuse and/or repurposing.

I had a call with a company that designs, builds, and sells equipment to test batteries that come out of EVs and hybrids. They have been in business for years, but are now endeavoring an attempt to push their products into the automotive recycling industry. During the call, the sales representative asked me where all the batteries are currently going in our industry. After a few moments of discussion, we finally agreed that most electric vehicle and hybrid batteries are most likely sitting on the shelves of recyclers across the country. 

This conversation got me thinking about the future of these batteries in our industry. Fear and lack of knowledge of EVs and hybrids have prevented many recyclers

from even attempting to buy them from the auctions. As more and more of these technology-fueled vehicles are being sold, we must embrace them, learn about them, find outlets for their components, and provide opportunities for reuse and/or repurposing.

According to ev-volumes.com, EV and PHEV (plug-in hybrid electric vehicles) sales in North America grew from 375,000 in 2020 to 735,000 in 2021 and now account for 3.8% of all new vehicles sold in North America. This data also shows total sales increased from 2020 to 2021 by 96%. Similar trends are expected in the coming years. 

The Crystal Ball

So, what does the future EV battery market look like in our industry? In my opinion, we will see a few existing recyclers transition their business model to consolidate EV batteries for the purpose of refurbishing, testing, and selling them for reuse in the same application that they were removed from. What does that mean? I believe that most recyclers will willfully avoid gaining knowledge of batteries, refurbishing them, testing them, and reselling them. This will result in nearly zero sales to end-users from traditional recyclers. However, there will be a few, large recyclers that will embrace the challenge, see the opportunity, and become the experts in the field. These recyclers will grow very rapidly, become the trusted name in the industry, and generate more profits than many traditional recyclers have ever dreamed possible.

Because our industry as a whole will fail to adapt fast enough, other companies from outside our industry will start to consolidate batteries for the purpose of refurbishing, testing, and repurposing them.

EV Battery Life Opportunities

Opportunities for repurposing EV batteries are already under development. Repurposing is a process of converting one product from its original intended use to another use.

In this industry, we will see energy storage companies tap into the automotive recycling industry to provide used EV batteries as their “raw material” to build things like powerwalls, backup power, and energy storage solutions for off-grid facilities. This emerging market is currently receiving grants from the U.S. government, so look for explosive growth in this segment in the next couple of years.  

The technology to recover the raw materials found in the EV batteries has also improved radically over the past couple of years. As the cost of EV battery material recovery continues to drop, we will eventually see EV batteries have a positive value for basic element recovery. In English:  The cost of recovering the lithium, cobalt, and nickel from EV batteries has historically been higher than the value of the recovered material. Two things are currently happening that will change this scenario: the raw materials are increasing in value and government grants are making the cost of developing the recovery equipment less of a burden. This will allow EV batteries to become valuable for true recycling. In this case, EV batteries will replace the catalytic converter in our industry. We will see them pulled and shipped to a recovery company for the purpose of recovering the lithium, cobalt, and nickel they contain. 

Our industry is truly changing before our eyes. It is time now to consider now how are you going to react. Are you going to be a market creator? Will you train and certify your team and business to show your leading expertise to these new outside industries looking to work with you? Getting on board starts now. 

Chad Counselman, president of Wise Counsel Group, is a 28-year veteran of the industry. He and his team provide consulting services and develop custom software solutions for recyclers, globally. He was a third-generation recycler at Counselman Automotive Recycling, until he sold his multi-site operation in 2019. In 2020, he served as Director of Global Sales and Development at Auto PARTnered Solutions. He has also served as president of the Automotive Recyclers Association and the president of the Alabama Automotive Recyclers Association. Reach him at Chad@Einstein.tools or 251-391-6551.

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