The rapid growth of electric vehicles has led many companies to acknowledge that the future of mobility is electric. However, concerns about industry monopolization have emerged alongside the impressive technology and its potential to address various modern challenges.
Currently, China dominates the electric vehicle battery manufacturing industry due to its abundant mineral resources and cheap labor. China also leads in battery recycling technology, with three times the recycling capacity of the United States, according to a report by Energy Portal. The global electric vehicle battery recycling market is expected to grow by over 60 percent by 2028, as reported by Reuters.
In response, the United States aims to capitalize on the growing electric vehicle market. The Inflation Reduction Act of 2022 includes a provision called the “Advanced Manufacturing Production Credit,” which offers tax credits for ten years to promote local production of electric vehicle batteries. Recycled batteries also qualify for subsidies if they are recycled within the United States, regardless of their initial place of production.
These incentives enable U.S. electric vehicle manufacturers to accelerate production while reducing their dependence on China for battery supply. This has generated competition in the secondary market for electric vehicle batteries, leading to an anticipated rise in U.S.-based battery recycling technology. For example, Ascend Elements, a battery materials manufacturer, plans to utilize two grants from the U.S. Department of Energy totaling $480 million to construct a new manufacturing facility in Kentucky, scheduled to open in Q4 2024, according to Energy Portal.
Encouraging battery recycling through federal grants has the potential to decrease the country’s reliance on foreign-mined materials. By recycling used batteries and extracting valuable metals, the need for further mining can be reduced, preserving natural resources and lowering costs for consumers.
We have reached out to the U.S. Department of Energy for further details regarding the specific clause in the 2022 Inflation Reduction Act. As of now, we are awaiting their response and will update this story accordingly.