From waste to value: the potential for battery recycling in Europe

More recycled battery materials - cobalt, lithium, manganese and nickel - will come from the electric cars (EV) stock and planned battery gigafactories across Europe. This represents an enormous opportunity for the EU and the UK to source materials locally and sustainably, but strong policies will be needed to make this happen.

T&E’s new analysis finds that:

Europe should urgently mainstream support for circularity and recycling across its policies and treat it as another clean tech. Beyond the effective Battery Regulation and the Critical Raw Materials Act, the upcoming Circular Economy Act should support scaling of local recycling factories, introduce measures to restrict exports of battery waste and simplify intra-EU shipment of end-of-life products. EU and national funding schemes should equally prioritise integrated material recovery projects, including for commercialisation and technology gaps.

By recycling lithium-ion batteries, Europe can reduce its reliance on virgin raw materials, alleviating environmental burdens associated with mining and extraction. From a geopolitical perspective, battery recycling also paves the way to material sufficiency and supports local economies.

However, several questions arise when considering Europe's recycling potential. What is Europe’s potential in terms of feedstock availability and recycling capacities? How many EVs can recycling enable in the long run? And what is the environmental footprint of recycling activities compared to ore mining and processing? These are the questions T&E addresses in this report, along with policy recommendations to advance the circular economy in the EV sector.

According to T&E’s latest estimates, battery demand from electric vehicles (EVs) and energy storage systems (ESS) in Europe will reach around 970 GWh by the end of the decade, expanding to nearly 2 TWh by 2040. This surge in battery demand also means that these batteries will need to be managed and recycled once reaching end-of-life (EoL), becoming a crucial source of raw materials. The influx of EoL batteries will start to accelerate significantly after 2030, with around 170 GWh of batteries available for recycling in 2035, rising to 470 GWh by 2040.

In parallel, the rise of gigafactories across Europe is expected to generate substantial volumes of production scrap (i.e. from non-compliant products and batteries allocated for testing, maintenance and refurbishment unrelated to sales), which will significantly contribute to the recycling feedstock, especially in the near term. By the end of the decade, over 100 GWh of production scrap will be available for recycling, representing the primary source of feedstock. This is also the time when the scrap volumes are expected to peak and then stabilise as companies ramp up production and mature, achieving operational efficiency. Starting with the mid-2030s the influx of EoL batteries will progressively start to dominate the recycling stream, making up for 72% of the feedstock by 2035 and 88% by 2040.

Lithium: As a critical element in all lithium-ion battery chemistries, whether NMC (nickel manganese cobalt), LFP (lithium iron phosphate) or other, lithium will be needed in batteries for a long time. T&E estimates recycled lithium to meet about 11% of demand during 2030-2035, increasing to 23% by 2040. The volume of recycled lithium from scrap is projected to peak around 2030 and then stabilise as gigafactories reach full operational efficiency. Meanwhile, the recovery of lithium from EoL batteries will significantly increase after 2035, becoming the main source of feedstock.

Nickel: Nickel’s high energy density enhances driving range in batteries, leading to increased use in NMC chemistries. Recently, however, the trend toward higher nickel content is being moderated by the growing adoption of nickel-free LFP and LMFP (lithium manganese iron phosphate), as well as new manganese-rich chemistries with minimal nickel.

Despite this shift, nickel will remain part of the chemistry mix. As European gigafactories scale up production of high-nickel NMC batteries, significant volumes of production scrap are expected to become available for recycling in the late 2020s. By the early 2030s, recycled nickel is expected to cover 12% of demand. Over time, as EoL batteries become more prevalent, the share of recycled nickel relative to demand is expected to increase to 16% by 2035 to 28% by 2040.

Cobalt: Cobalt in batteries provides thermal stability and enhanced performance, but due to past price volatility and ethical concerns associated with mining practices in the Democratic Republic of the Congo, its use in NMC chemistries has been reduced in favour of nickel. Despite this, cobalt will continue to play a key role in high-performance EV batteries, including NMC, NCA (nickel cobalt aluminium) and their variants like NMCA (nickel manganese cobalt aluminium) and LMR-NMC (lithium-manganese rich nickel manganese cobalt), though in smaller quantities.

By 2030 already, recycled cobalt could meet up to 19% of the demand. As batteries with legacy chemistries higher in cobalt content reach end of life and cobalt demand from EV and ESS batteries start plateauing around 2035, the share of recycled cobalt relative to total demand is projected to double to 40% by 2035 and reach 53% by 2040.

Manganese: In response to the diverse needs for performance and affordability, manganese-containing chemistries are emerging as a middle ground alternative, providing longer driving ranges than LFP batteries, while being cheaper than nickel-rich alternatives. A theoretically abundant and lower cost raw material, manganese can partially replace cobalt or nickel in certain chemistries like LMR-NMC or NMCA, and can improve the driving range of LFP batteries (the so-called LMFP batteries). Nonetheless, despite its relative abundance in earth’s crust, the future broader adoption of manganese may be constrained by the limited global capacity for producing high-purity manganese sulphate. In this context, recycling manganese becomes increasingly important in addressing potential shortages in the long term. Historically, economic incentives for recycling manganese were limited, but advancements in technology now enable recovery rates of up to 95% from spent batteries.

As gigafactories increase production of manganese-rich chemistries like LMR-NMC, NMCA, and LMFP in the late 2020s, the share of recycled manganese is expected to rise and reach 13% of demand by 2030, decline to 10% by 2035 due to increased demand and rise again to 19% by 2040, with fluctuations during this period reflecting the fast-evolving market.

All in all, the recycling of production scrap from gigafactories and EoL batteries plays an important role in reducing reliance on virgin raw materials and bridging the supply-demand gap in Europe. Cumulatively, recycling could supply about 105 kt of lithium (LCE), nickel, cobalt and manganese by 2030, with volumes potentially more than tripling to 390 kt by 2040. These recovered materials could meet 11%-19% of the demand from EVs and ESS by 2030 and 19%-53% by 2040, depending on the metal and evolving battery chemistries.

As more batteries reach end of life and recycling feedstock grows, this potential will increase too. By 2035, recycled metals could power between 2.0 and 9.9 million electric cars in Europe (or 13% to 63% of sales), rising to 3.8 to 15.4 million electric cars (or 24% to 95% of sales) by 2040. Interestingly, in 2040 the lower end of the range corresponds to manganese due to its increasing adoption in both nickel- and iron-based chemistries, resulting in fewer cars produced from the available recycled manganese.

Nickel: The minimum recycled contents for nickel, 6% by 2031 and 15% by 2036, are also achievable, compared to the forecast 13% and 19% respectively. Considering that nickel-containing chemistries have historically been favoured in Europe over alternatives like LFP, the scrap pool available over the next decade will provide important feedstock for nickel recovery. In addition, advancements in recycling technologies now enable the extraction of up to 95% of the nickel from spent batteries.

Cobalt: The Battery Regulation requires at least 6% of recycled content by 2031 and 12% by 2036. Cobalt is expected to account for even higher shares of battery demand than lithium and nickel (i.e. 27% and 46% respectively) due to a combination of factors. Firstly, cobalt has been a critical component in many lithium-ion batteries and its high economic value enabled maximisation of its recovery rates from batteries. The Battery Regulation mandates cobalt recovery rates of 90% by 2027 and 95% by 2031 from batteries, which is feasible with the current technologies. Secondly, due to price volatility and sustainability issues, the cobalt content in batteries has been reduced over time, impacting the demand for cobalt. Considering the variety of alternative chemistries emerging, T&E estimates the demand for cobalt to stagnate over the long term, with the % share of recycled cobalt to demand increasing.

Nickel is extracted from two main types of deposits: sulphide ores and laterite ores. Sulphides can tend to have higher nickel content and are found in various locations globally including Canada, Russia, Australia, while laterite ores are more abundant, but have a lower nickel content and are typically located in tropical regions. In the last decade, laterite mining, often associated with higher environmental impacts, has increased significantly due to Chinese investments in Indonesia. This growth has recently led to an oversupply, which has depressed prices and put on hold some operations outside Indonesia and China that might have better environmental profiles. Recycling nickel from EV and ESS batteries in Europe could replace the output of nearly 1 average-sized nickel mine (42 kt output per year) by 2030 and up to 3 mines by 2040. In terms of ore extraction, this could save 1.8 Mt of ores in 2030 and 6.6 Mt in 2040.

Cobalt is generally mined as a by-product of nickel or copper operations, with the only primary cobalt operation being a mine in Morocco. While the DRC remains the predominant source of cobalt, supply from Indonesian laterite sources is expected to increase its market share, driven by expansions in nickel projects. Recycling cobalt from batteries in Europe could avoid the mining of 3.7 Mt by 2030 and 14.3 Mt by 2040, potentially substituting the output of 1 average cobalt mine (5 kt per year) by 2030 and 4 mines by 2040.

Manganese, which is more abundant in Earth’s crust and occurs in higher concentrations within ores, is predominantly mined in South Africa. The country is expected to expand its global share of manganese production in the long term. Recycling manganese could potentially replace up to 0.1 Mt of ores by 2040, replacing the production output of 1 average manganese mine by 2040.

Overall, T&E estimates that the recovery of these raw materials from battery recycling operations could enable the substitution of up to 4 mines and save up to 9.7 Mt of ores and brines by 2030, rising to at least 12 mines replaced and nearly 40 Mt of ores by 2040. This reduction would alleviate resource strain and minimise environmental impacts associated with primary mining.

An economic allocation based on a 3-year average of each material price (2021-2024) is used for the analysis by Minviro, as this is a standard approach in the industry. The carbon footprint of the whole recycling process is allocated to the different materials (lithium, nickel, cobalt, ...) based on their economic value. This means that changes in material prices in the future will also change the final results. Minviro applied a cradle-to-gate approach, where the cradle is the point of extraction of raw materials and the treatment of spent batteries in the case of recycling. The end gate is set at the point of production of battery grade lithium hydroxide monohydrate. CO₂ emissions from recycling are largely due to the reagents required for hydrometallurgical recycling and the combustion of gas for heating processes. In the future, further emission reductions could be achieved in Europe through electrification of some processes (and the use of renewables), and better integration of recovery into the process, such as the recycling of waste and the conversion of sodium sulphate into sulphuric acid for re-use in the process.

As of the latest count, 34 material recovery projects (both integrated and hydrometallurgical recycling plants, excluding plants focused on pre-processing only) have been announced across Europe by 2030, with a combined capacity of around 780 kt batteries. Notable market players in these projects include: Northvolt (Sweden), Aurubis (Belgium), BASF (Germany), Altilium (UK), Fortum (Finland) and Orano (France). Only 1% of the total capacity is planned by Asian players, whereas their presence is more prevalent in the pre-processing stage of recycling (16% of the planned capacities in 2030). This suggests that Asian companies overseas may prefer to process batteries into black mass and export it back home for further material recovery, rather than investing in capital- and opex-intensive material recovery plants in Europe.

Overall, around 44% of the announced material capacities in Europe face significant risks or have already been on hold (e.g. projects by BASF and Eramet and Suez JV) due to project complexity and high capital and operating costs in a still-developing market. Uncertainty around financing and permitting may lead to some project delays, but those integrated with pre-processing or related to battery materials or metal production are relatively better positioned for success.

If the high risk projects do not come online, only around half of the available feedstock by 2030 can be processed locally, resulting in significantly less locally sourced recycled content available.

While legislation - e.g. limiting black mass exports outside the EU - aims to create a more level playing field, companies recycling in Europe also need targeted financial, de-risking and industrial support to compete with their Chinese counterparts on the global scene.

LFP recycling. While nickel-rich NMC recycling has traditionally received a lot of focus given the mature (and economically attractive) recovery of nickel and cobalt, lithium-iron-phosphate (LFP) batteries are recycled a lot less, despite becoming increasingly relevant on the European EV and energy storage markets.

Overall, there appears to be two questions when it comes to LFP recycling: whether or not it is technically feasible to recycling key elements such as phosphate, iron and graphite (more relevant in LFP given its weight compared to NMC), and whether it is economically viable to recycle this battery chemistry.

First, when it comes to technical feasibility, advancements in hydrometallurgical methods have made it possible to separate and recover key elements of LFP batteries. Selective leaching extracts the lithium (as lithium carbonate) from the iron phosphate structure, allowing the latter to be filtered out.

Graphite recycling has also become technically feasible, especially with hydrometallurgical processes that can recover graphite without burning it off as in pyrometallurgical methods. Obtaining battery-grade graphite requires strict purification due to contaminants that accumulate over the battery’s lifetime. However, companies like Fortum and Altilium are developing recycling facilities capable of producing such a product that meets specific anode specifications, either via cooperation with OEMs or with graphite/anode producers. From a geopolitical perspective, graphite recycling enables the diversification of a supply chain that is heavily dominated by China and represents an opportunity for Europe to achieve some level of self-sufficiency.

Second, while LFP batteries might be technically feasible to recycle with time, the economics of recycling appear to be less attractive, due to their lower content of valuable metals compared to NMC batteries. e.g. phosphorus is an abundant fertiliser material with no secondary market today. With lithium as the main valuable metal typically recovered today, LFP batteries recyclers are heavily reliant on lithium prices.

Some strategies to improve the overall economics of LFP batteries recycling include:

With LFP and LMFP batteries projected to meet a significant share of Europe’s demand in the coming years (56% by 2030 and 59% by 2040), and more gigafactories announcing LFP production, European recycling businesses must adapt to process these chemistries. Developing policies that require that, as well as infrastructure capable of handling diverse battery types will be crucial. On the policy side in particular, European regulations should enforce recycling efficiency targets for all battery chemistries, including emerging ones, ensuring a sustainable and adaptable recycling framework.