The global electric vehicle (EV) battery recycling market is projected to grow significantly, reaching a value of USD 23.72 billion by 2035 from USD 0.54 billion in 2024, according to recent estimates. This growth corresponds to a compound annual growth rate (CAGR) of 40.9% over the forecast period.
Key drivers of this expansion include efforts to reduce environmental impact and address the scarcity of essential materials such as lithium, cobalt, and nickel. Recycled materials offer cost advantages over newly mined resources due to lower extraction and transportation expenses. Additionally, the establishment of localized and alternative supply chains for recycled EV battery materials is essential for minimizing costs, ensuring sustainability, and preventing supply chain disruptions.
Government regulations globally are playing a crucial role in fostering the growth of the EV battery recycling market. For example, the European Union has introduced stringent regulations aimed at increasing recycling rates and decreasing the reliance on raw material imports. These regulations impose greater responsibilities on battery manufacturers, including the disclosure of carbon footprints and adherence to higher recycling targets. According to the International Review on the Recycling Ecosystem of Electric Vehicle Batteries, manufacturers will be required to recycle at least 65% of a battery’s total weight by the end of 2025, increasing to 70% by 2030. Such regulations are expected to significantly contribute to the market’s growth.
Lithium is anticipated to exhibit the highest CAGR within the EV battery recycling sector, driven by intensified initiatives from recyclers and original equipment manufacturers (OEMs) to recover this critical material. The increasing demand for lithium-ion batteries, fueled by the global shift toward electric vehicles, emphasizes the need for a stable lithium supply. Collaborations, such as the partnership between BMW of North America and Redwood Materials, exemplify efforts to establish closed-loop systems for efficient lithium extraction from end-of-life batteries, ensuring resource sustainability and reducing dependency on mining.
The recycling of Lithium Iron Phosphate (LFP) batteries is also expected to grow rapidly. The adoption of LFP batteries in electric vehicles is on the rise due to their cost-effectiveness, safety, and longer lifecycle compared to other lithium-based chemistries. Recycling firms are employing various methods to efficiently extract valuable materials from spent LFP batteries, thereby minimizing environmental impact and reducing waste.
Europe is identified as the fastest-growing market for EV battery recycling, driven by strict regulations and increasing EV adoption. The region’s focus on reducing dependency on raw material imports and developing local supply chains has led to the establishment of advanced recycling facilities by key players such as Umicore, Fortum, and BASF. Collaborative efforts between automakers and recycling companies, supported by government incentives and research and development funding, are further accelerating market growth.
Major players in the EV battery recycling market include Contemporary Amperex Technology Co., Limited (CATL) from China, GEM Co., Ltd. from China, Umicore from Belgium, Glencore from Switzerland, and Fortum from Finland. These companies are pivotal in providing comprehensive recycling solutions and are exploring geographic diversification to expand their market presence.
Source: Markets and Markets
