With electric vehicles gaining popularity at an unprecedented pace, it goes without saying that a lot of companies have accepted that the future of mobility is indeed electric. While the technology is well and truly impressive, and holds a lot of potential to address a lot of problems facing the modern world, the monopolization of the industry is something that’s feared by a lot of stakeholders.

At present, China dominates the EV battery industry, thanks to its cheap labor and vast availability of minerals and resources needed to produce EV batteries. Recycling used batteries and manufacturing new ones using the materials extracted is also a major thing to consider. In this aspect, China is also ahead thanks to its extensive battery recycling technology. A report by Energy Portal cites that China has three times the capacity of the US when it comes to recycling lithium batteries. On top of all that, Reuters states that the global EV battery recycling market is anticipated to grow by more than 60 percent by 2028.

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With all that on the table, the US is keen on capitalizing on a growing EV market. Specifically, the Inflation Reduction Act of 2022 (IRA) has a provision called the “Advanced Manufacturing Production Credit.” Through this clause, the government offers tax credits for ten years to help boost the local production of EV-focused batteries. When it comes to recycled batteries, they also qualify for subsidies, so long as they’re recycled in the US – regardless of where they were produced in the first place.

Because of this, US EV makers can accelerate their production, while at the same time reducing their dependence on China for their battery needs for future EV models. As such, the race is on in this so-called “secondary market” for EV batteries, as a massive boost in US-based EV battery recycling tech is foreseen in the near future. For example, the article by Energy Portal states that Ascend Elements, a battery materials manufacturer, is planning to use two US Department of Energy grants amounting to $480 million to build a new manufacturing facility in Kentucky. Said plant is set to open its doors in the fourth quarter of 2024.

Encouraging battery recycling in the US via federal grants has the potential to decrease the country's dependence on foreign-sourced mined materials. Through the recycling of used batteries and the extraction of valuable metals, the necessity for further mining can be lessened, therefore preserving the natural resources involved in making new batteries, while at the same time translating to lowered costs at the level of consumers.

We recently reached out to the US Department of Energy for additional information regarding the specific clause in the 2022 Inflation Reduction Act. As of this writing, the agency has yet to provide a response. We’ll be sure to update this story as more information is provided.

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