The Future of EVs: Market Update

Battery Recycling and Declining Costs Set to Accelerate Market Growth

As the transportation sector rapidly shifts towards electrification, two critical developments are shaping the future of electric vehicles (EVs): the rise of advanced battery recycling facilities and the accelerating decline in battery prices. Together, these trends are driving sustainability in the EV sector, making it more environmentally friendly and economically viable.

Battery Recycling: A Step Toward Sustainability

One of the key challenges facing the EV industry is the treatment of end-of-life batteries, which are rich in valuable materials like lithium, cobalt, and nickel. Proper recycling of these batteries not only helps manage waste but also recovers finite resources that can be reused in the production of new EV batteries, reducing reliance on raw material extraction.

In response to this challenge, several state-of-the-art battery recycling facilities have recently emerged across Europe. In Germany, Mercedes-Benz has partnered with Primobius to open a cutting-edge plant using a mechanical-hydrometallurgical process that achieves a remarkable recovery rate of over 96%. The plant can recycle 2,500 tonnes of batteries annually, enough to produce 50,000 new battery modules per year. This capacity equates to about 5,000 EV batteries, helping the automaker close the loop on battery life cycles as it pursues its goal of net carbon-neutrality in new vehicles by 2039.

Similarly, a joint venture between Ascend Elements and Elemental Strategic Metals has opened a large recycling facility in Zawiercie, Poland. With an annual capacity of 12,000 tonnes, this plant can recycle approximately 28,000 EV battery packs each year. The facility processes used lithium-ion batteries to produce black mass, a precursor material for new EV batteries, and is expected to introduce lithium extraction capabilities by 2026. The venture also plans to expand its operations with an even larger facility in Germany, emphasising Europe’s growing leadership in sustainable battery management.

Falling Battery Costs: A Catalyst for Mass EV Adoption

While advancements in recycling contribute to environmental sustainability, the economic viability of EVs is primarily driven by the steady decline in battery prices. According to a recent analysis from Goldman Sachs, global average battery costs fell from $153 per kilowatt-hour (kWh) in 2022 to $149 in 2023. Projections indicate a further drop to $111 by the end of 2024, with prices expected to reach $80/kWh by 2026. This decline is attributed to technological advancements and reductions in the cost of critical battery metals such as lithium and cobalt, which make up nearly 60% of battery costs.

Nikhil Bhandari, Co-Head of Goldman Sachs Research’s Asia-Pacific Natural Resources and Clean Energy Research, explains that innovations in battery chemistry have led to increased energy density, improving battery performance while lowering costs. This trend is pivotal for the EV market, as analysts predict that price parity between electric vehicles and their internal combustion engine counterparts could be achieved by 2026. Once this milestone is reached, consumer-led mass adoption of EVs is expected to take off, driven by the economic advantage of lower total cost of ownership.

A Sustainable and Economically Viable Future for EVs

The convergence of advanced battery recycling technologies and declining battery costs is paving the way for a more sustainable and affordable future for electric vehicles. As Europe continues to expand its recycling infrastructure and the global market experiences further cost reductions, the EV sector is poised for significant growth. By 2026, not only will the environmental impact of EV battery production be minimized, but the economic case for widespread EV adoption will become stronger than ever.

In the long term, these trends promise to transform the automotive industry, making electric vehicles the standard rather than the exception, while supporting global efforts to reduce carbon emissions and mitigate climate change.

To keep up to date with the latest developments in the Transportation Sector, subscribe to our industry insights Newsletter >> Subscribe

And for on the minute articles subscribe to our LinkedIn Industry Insights >> Subscribe

Interested in how the development of TVs in the transportation sector will impact your business? Contact Hickman Shearer Transportation expert James Fox >> Contact James