By Ravindra Ojha
The number of electric vehicles on roads globally is around 10 million currently and it is expected to increase to 230 million by 2030. Demand for batteries, which are the most important component of an EV and account for 40% of the vehicle’s worth, would likewise expand dramatically. The mineral resource and production volume need to grow exponentially to cater to the insatiable hunger for EV batteries.
It is estimated that the current 10 million electric vehicles of the world moving on the roads would quickly gallop to 230 million by the year 2030. The demand for batteries which is an important aggregate of an electric vehicle (EV) that comprises 40% of the EV value, would also grow exponentially. The life of an electric vehicle battery is more than 10 years, which is more than the life of the vehicle. The raw material constituents of the battery are key in the entire supply chain flow.
The costly lithium-ion batteries of electric vehicles with rare earth metals – Lithium, Cobalt and Nickel are currently difficult to recycle as they are not designed for reuse/recycling. It is estimated that only 5% of Lithium-ion batteries are currently recycled. Therefore, the challenge lies in the comprehensive use of the batteries till end-of-life (EoL) and thereafter, collecting, dismantling, and reprocessing for metal extraction. This compels the supply chain stakeholder to redesign the system with a new outlook keeping in mind safety, cost-effectiveness, efficiency and sustainability.
The key battery supply chain actors are designers, geologists, raw-material miners, refiners, mid-stream suppliers, process designers, battery material & part manufacturers, module/pack producers, policymakers and electric vehicle manufacturers.
With the large predicted volume of electric vehicles, the world battery economy will continue to display its insatiable hunger for material consumption. The geologists shall have to accelerate their exploration for mineral resource sites, while, the manufacturers shall have to innovate on material productivity improvements.
Very similar to the famous Johari-window model of self-awareness, a material Exploration-Consumption grid has been developed for a better understanding of circular economy (CE) in battery supply chain-related issues.
The two quadrants I and IV form the critical quality factors of CE and represent the available mineral reserves (finite and harmful to the environment) and the number of EoL batteries for recycling (growing quantity with collection challenges) in the supply chain.
|Quantum of ‘end-of-life’ material for recycling IV||Quantum of the hidden potential of mineral resources not yet explored. III|
|Quantum of mineral reserves ready for extraction & manufacturing. I||Quantum of identified mineral resources for becoming potential reserves. II|
The linear model of ‘take-make-use-dispose’ is a common practice. With resource management getting squeezed between increasing demand and depleting material resources, the linear business model is already challenged by CE. The CE economy aims at re-engineering the after-production processes for looping. It encourages used-product collection after its end-of-life (EoL) period.
The envisaged barriers to the CE model of the electric vehicle battery supply chain are:
- Lack of a well-defined reverse supply chain of EoL batteries for reuse or recycling.
- The technically complex and expensive recycling process of batteries is due to the numerous chemical transformations needed.
- Burgeoning demand for the rare earth metals from mines is likely to give rise to ethical and environmental concerns – child labour, pollution, heavy-water usage and depleting finite reserves.
- Lack of a robust supply chain framework: manufacturing product retirement collection inspection technology scheduling remanufacturing skilling.
- Perceived inferior positioning of remanufactured battery business with OEMs, lack of brand value of the products using the recycled battery, high focus on the newness of products rather than its quality and cost-effectiveness,
- Lack of concern of the society on environment and cost-effective remanufacturing technology.
- Lack of strong collaboration among key enterprise functions for battery management: manufacturing, marketing, collection from consumers, remanufacturing and remarketing.
- Challenges of uncertainties in quantity, quality and timing of product returns for reprocessing.
- Lack of incentive for product return in today’s disposable society with ‘cash-rich’ and ‘time-poor’ consumers.
The cost of batteries, the key driver, can be reduced by standardization of its parts and manufacturing processes, economies of scale and availability (virgin and recycled) of raw material. Technology management is the other critical variable in the battery supply chain – chemistry-related technologies, solid-state processes and silicon anode technologies. Another success factor in the supply chain would be localization to facilitate availability.
Localization would mean the availability of land, labour, energy and the social fabric. With the high degree of focus on sustainability the drive to use renewable energy in the manufacturing process, new sustainable manufacturing processes, water consumption, and ethical dimensions will also form a key role. The seven recommendations for accelerating the CE in the battery supply chain are the following:
- Owing to the reason of battery life being more than the vehicle life, complete use of the battery would be pushed by the user. It would mean using it to EoL before recycling.
- Performing batteries, after a certain period, may not be deemed fit for vehicle use. but can be used for other useful but less demanding applications. Therefore, alternate applications of batteries with life should be explored
- Optimizing the life cycle of the battery by effective charging processes and recommended adherence to defined technical systems during the in-usage stages should be focused on.
The growing modular design, solid-state technology and blade variety batteries are less complex, more compact and much safer.
- Lithium-ion batteries, beyond their use in vehicles, can also be used for solar and wind energy storage purposes to smoothen the energy fluctuation in grids.
- Technocrats, designers, innovators and manufacturers have to collaborate very closely with the policymakers in this fast-developing battery technology for safety, cost-effectiveness, environment sustainability and social harmony.
- Policymakers will have to evolve an attractive reverse supply chain framework for EOL batteries to feed battery recyclers. If the policy implementation is successful and every battery is fed back, the need to import or mine could stop at a certain stage.
In summary, the burgeoning growth of electric mobility would significantly impact the CE framework of the batteries. It is going to be an exciting though challenging journey ahead. A collaborated effort by engineers, innovators, technocrats, manufacturing industry leaders and policy-makers would significantly improve the green mobility of the world at large. The fast-evolving CE in the battery supply chain is bound to have a favourable impact on the Atmanirbhar and Swach Bharat drives initiated by the government.
(Ravindra Ojha is Professor of Operations at Great Lakes Institute of Management, Gurgaon.)
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