The US Inflation Discount Act, now previous its first anniversary, provides shoppers and automakers in the US a robust incentive to purchase or promote a brand new electrical car (EV): a federal tax credit score of as much as $7,500.
However for automobiles to qualify for the complete clear car credit score, each the minerals and the parts utilized in lithium-ion EV batteries should meet new provisions geared toward strengthening the home provide chain.
By 2027, 80% of the worth of important minerals within the EV battery have to be mined or processed in North America, mined or processed in nations with a free commerce settlement with the US, or recycled in North America.
By 2029, 100% of the worth of the parts in a battery have to be manufactured or assembled in North America. Additionally key: beginning in 2024, electrical automobiles that comprise battery parts or minerals from China and different so-called “overseas entities of concern” is not going to be eligible for the Clear Automobile Credit score.
These necessities are a giant change from the established order. As much as at present, many of the lithium, cobalt, graphite, and nickel utilized in EV batteries are processed by China and mined in different components of the world, just like the Democratic Republic of the Congo and Australia.
Whereas the US has some deposits of the wanted minerals and there are plans to construct refining capability, the worldwide distribution of minerals and China’s head begin counsel that assembly these necessities solely by mining and processing will probably be difficult.
Fortunately, the home content material necessities of the Clear Automobile credit score could be met in one other manner: procuring the minerals from recycling battery materials.
Proper now, the EV battery recycling trade is in its infancy: the truth is, many of the lithium-ion battery supplies going into recycling crops at present don’t come from end-of-life EV batteries however slightly from scrap materials created throughout lithium-ion battery manufacturing.
This is sensible, given that almost all EV batteries produced by 2023 are nonetheless on the highway. However with the Inflation Discount Act doubtlessly including 37 million EVs on the roads between 2023 and 2032, recycling end-of-life EV batteries will tackle new urgency.
Additionally it is price mentioning that gathering and in the end recycling EV batteries as they depart the roads is crucial from each an environmental and well being perspective.
Certainly, if improperly disposed, the batteries may trigger fires or contaminate lands and waters with poisonous chemical substances. Failure to recycle EV end-of-life batteries may also be an financial loss when contemplating the precious supplies they comprise, equivalent to cobalt or nickel.
An essential piece of knowledge, due to this fact, is whether or not the U.S EV battery trade is prepared for the upcoming challenges. In an effort to reply this query, we gathered details about operational and introduced recycling capability as of September 2023 from information articles and press releases.
An attention-grabbing statement is that recycling crops are being in-built areas the place EV and lithium-ion battery manufacturing websites are already situated. This creates a coherent ecosystem the place the recycled materials can simply be fed again into the lithium-ion battery and EV manufacturing strains.