The increasing adoption of electric vehicles, the rising number of smartphones, laptops, and other consumer electronics, and the growing need for eco-friendly energy storage solutions have been driving the Lithium-ion (Li-ion) battery market in India. Estimated at $2.5 billion in 2023, it is expected to cross $5 billion in the next five years.
The increasing demand for Li-ion batteries has also brought to the fore the need for an organised battery recycling industry in place. Expected to be a $30 billion market globally by 2030, Li-ion recycling industry is still in its nascent stages in India and has gaps to be fixed. The absence of a strong reverse supply chain which ensures the collection and safe transportation of end-of-life batteries to the recycler continues to be a challenge.
Unorganised reverse logistics
Pankaj Sharma, co-founder of Bengaluru-headquartered EV battery technology company Log9, points out that in the case of lead acid batteries used in motor vehicles, a pricing mechanism that encourages the recycling of such batteries already exists. According to him, the Li-ion battery industry could also benefit immensely from a similar system.
“When a lead acid battery, which is the 12-volt starter battery in our vehicles, goes down the customer takes it to the battery seller. The seller would typically give him ₹300-400 discount on the new battery as an exchange price,” Mr. Sharma says.
“There is a pricing mechanism and a supply chain where the seller is interested in buying the old battery, offsets some money for a new battery, and then sends the old battery back to the manufacturer. In Li-ion battery the reverse logistics is a little tricky because a similar back-end supply chain incentivisation must be created first,” he adds.
Identifying touch points
As per Battery Waste Management Rules 2022, the OEM or the producer of the battery has the obligation of Extended Producer Responsibility (EPR) to ensure the recycling or refurbishing of the batteries they introduce to the market. Producers are also required to ensure that the waste battery is recycled through certified recyclers.
While in a motor car replacing a battery is a quicker and easier process which could be done by a local battery dealer, it’s not the same with an EV. The customer would need to take the vehicle to the original equipment manufacturer (OEM).
“Step number one in establishing reverse logistics would be identifying the first touch point where the customer can take an electric vehicle when the battery reaches its end of life. Right now, those kinds of companies are non-existent,” says Mr. Sharma.
That necessitates the creation of a mechanism and some kind of financial incentive to encourage the customer to bring back the dead batteries to the OEMs, he notes.
While the first challenge of a strong reverse supply chain would be the collection of the batteries, the next step would be transporting them safely to the recycler. Li-ion batteries, even in a discharging state, are prone to catching fire if they come in contact with moisture and therefore transporting them is a riskier business.
The third step of the reverse logistics, Mr. Sharma explains, would be the recycling of the batteries and the final stage would be the purchase or consumption of the recycled materials.
“Reverse logistics would work when people involved in all four stages of it make or save money. Right now, it’s very well established in the lead acid battery. It is almost non-existent or just beginning to be created in the lithium-ion sector,” says Mr. Sharma.
“It’s very disorganized as of now. Different businesses are trying products or services related to different stages of reverse logistics. Step number three or recycling is where we see some action. But the entire pipeline is not yet created.”
Formalising the sector
Santhosh Kumar J., founder of Li-Circle which provides Li-ion battery recycling solutions, notes that most of the end-of-life Li-ion batteries are going to unorganized players today for recycling. Some organized players in the supply chain also encourage this as they get better prices from the unorganized players who don’t have to deal with compliance and formal documentation.
“The problem is not with the collection of the Li-ion batteries. Collection can be done at dealerships or service centres. But are these dealerships and service centres mandated to give it to authorized recyclers is the question,” he says.
According to him while a majority of lead-acid batteries are being recycled in India today, a large chunk of it goes to the unorganized players. If a similar situation is to arise in the Li-ion battery recycling sector, he points out that it wouldn’t bode well for the country as lithium, cobalt and nickel sources are scarce here.
“We have to recycle and mine them here rather than allowing some local processes to take over and waste them. Organised players can do a better job with that. There should be measures to bring the unorganised players to the organised sector,” Mr. Kumar notes.
While he feels that OEMs are yet to be serious about reverse logistics of the batteries, he hopes that with stricter EPR in place, there would be more positive changes.
“The markets of Li-ion battery and its recycling are in their nascent stages. This is the right time to correct the channels. We have existing channels for e-waste. We have to leverage them and make sure that the end-of-life batteries come to the authorized recyclers.”
Anupam Kumar, co-founder and CEO of Mini Mines, feels things are improving lately. According to him several OEMs earlier used to fulfil the EPR only on paper, but lately, the regulations have become stricter.
“The earlier scenario was that batteries were being thrown away, and nobody used to take care of the reverse supply chain. But with the government implementing strict policies, including bans on battery exports and black mass exports, it’s creating a strong reverse supply chain,” he says.
According to him a couple of years ago the battery recycling ratio was heavily skewed towards the unorganized sector which recycled almost 75 percent of the batteries. Noting that today it has come down to around 50 percent he hopes in the next couple of years organized players would be handling 80 percent of the recycling powered by a strong reverse supply chain and government policies.