Is the EU's new battery bill an opportunity or a challenge for China's new energy?

The European Union's "New Battery Law" introduced last year raised the standards for new energy batteries entering Europe, including some new regulations on battery production and recycling.

As a major country in the production and export of new energy batteries in the world, what impact will the successive implementation of these policies and standards have on China's relevant enterprises, and whether it is an opportunity or a challenge?

In the past few days, in Chuzhou, Anhui Province, Xingheng Power Co., Ltd., the production workshop is busy, the person in charge of the enterprise said that this year at the beginning of the year on the orders continued, especially from Europe orders have been scheduled to the beginning of next year.

Feng Xiao, Chairman of Xingheng Power Co., Ltd.: Many new standards or new bills, Xingheng may be the first in the world to get this certificate, as soon as we do publicity, my European guests see that you are so good, the first to meet this standard, the first to get this certificate, he is willing to contact you more, willing to cooperate with you more.

The new bill mentioned by the person in charge refers to the new battery law introduced by the European Union on August 17, 2023, and it is also the first policy in the world to make carbon footprint a mandatory standard for products, covering the entire life cycle of batteries: from design, manufacturing, application, to recycling and disposal, encouraging the industry to adopt more environmentally friendly production technologies and methods.

Feng Xiao, Chairman of Xingheng Power Co., Ltd.: It is a unified standard for China, Japan, South Korea, and European enterprises. Whoever can achieve this standard will enter the market, which is actually a good specification to promote the entire battery industry to improve safety standards and performance.

In a few months, Xingheng invested 1 billion yuan in Huaibei City, Anhui Province to build an annual recycling and processing of 40,000 tons of waste lithium battery factory, becoming the first lithium battery industry to realize a complete closed-circuit cycle of battery packs from production to recycling. According to the new regulations of the European Union, from 2027 onwards, power batteries exported to Europe must hold a "battery passport" that meets the requirements, recording the manufacturer, material composition, carbon footprint, supply chain and other information of the battery. In the future, batteries or new energy vehicles that do not meet this requirement will not be able to enter the European market.

He Ye, Secretary-General of the Beijing Resource Compulsory Recycling Alliance: The battery passport is more vivid, it is an ID card of the enterprise, and you use an ID card of this product. Starting from the production and manufacturing of batteries, your materials are made of recycled raw materials, what is the proportion, whether you are from standardized channels, it requires a very complete information disclosure.

Chen Xiaohong, researcher at the Development Research Center of the State Council: Definitely it is a challenge, but I think it is also an opportunity, an opportunity to turn a crisis into an opportunity, especially because Chinese enterprises also have some favorable conditions, because China is a world leader in the field of battery production, industry, technology, and industry.

Battery traceability management: China implemented it seven years earlier than the EU

The core of the EU's "New Battery Law" is the electronic management of the whole life cycle of batteries from production, use to scrapping and recycling, and China's electronic management of batteries is actually 7 years earlier than the EU.

CCTV reporter Chen Yuntao: China's automotive industry big data laboratory has a traceability management platform for the recycling of power batteries for new energy vehicles in China, on this platform, we can see the dynamic management information of the whole life cycle of each battery. From 2018 onwards, every battery produced in our country, its traceability information will be uploaded to this platform.

At present, this integrated management platform records more than 100 traceability information such as power battery production, sales, use, scrapping, decommissioning, and recycling. More than 14 million new energy vehicles, more than 20 million sets of battery packs, and more than 1,000 upstream and downstream enterprises in the industrial chain have registered on the national traceability management platform. The power battery can be traced to the source, traceable, controllable, and responsible.

Hu Song, Senior Engineer of China Automotive Research Institute: All product information is electronic, and each product has an electronic file and ID card. There is a 24-bit code, the first two digits are the manufacturer code of the vehicle, the fourth digit is the form of the production battery, and the fifth digit can see the material type of the battery.

Experts said that unlike the European Union with the help of the "New Battery Law" to make up for the shortcomings of the industry, as a major country of new energy vehicles, the underlying data accumulation of China's power batteries has been carried out for many years. Compared with the EU battery passport platform, which will only be launched in 2025, China's power battery implements electronic traceability management, which is actually 7 years earlier than the EU.

Hu Song, Senior Engineer of China Automotive Research Institute: Electronic management we should be the first in the world, (the new EU battery bill) draws on the experience of our country's traceability management, of course, on the basis of the traceability management model, it has made some optimizations or supplements, and developed a new model and new management ideas for their electronic passports.

However, compared with the EU's "New Battery Law", China still has to make up lessons in the battery legal system. Most of China's battery regulations are only for automotive power batteries, and the level of regulations is not high, the next step, China will accelerate the promotion of new energy vehicle power battery recycling from the aspects of regulations, policies, technologies, standards, industries, etc., and improve regulatory measures.

The increase in costs accelerates the overseas layout of China's battery companies

The EU's "New Battery Law" is a law that applies to all types of batteries, covering 4 categories, including consumer batteries, automotive batteries, portable batteries, and industrial batteries.

The current policies are not a one-time implementation, from 2023 to 2035 for more than ten years, the bill will successively introduce a series of node policies, but these thresholds will still bring higher costs to the export of power batteries.

At present, China's new energy vehicles have ranked first in the world in terms of production and sales for 9 consecutive years, and the export volume of new energy vehicles in 2023 will reach 1.203 million, a year-on-year increase of 77.6%.

Not only does it have to increase the cost before landing, but more importantly, new energy waste batteries can be sold for money in China, while in other countries, because the disposal cost is much higher than the residual value of the battery, waste batteries need to spend money to deal with.

Lin Xiao, founder of Suzhou Bocui Recycling: Europe as a whole is an extension of producer responsibility, simply put, who produces and who recycles, at this time, in fact, there will be a period of after-sales costs that we have not encountered in China, who will bear this cost?

The diametrically opposed two policies will make the profits earned by China's new energy vehicle companies in the early stage of sales, and it is very likely that they will have to pay much more recycling costs than profits in the future.

The introduction of the new battery law of the European Union will inevitably have a certain impact on battery companies exporting to Europe, but many people in the industry believe that the new regulations are not only a challenge, if actively responded, in the long run, it will also bring opportunities for the transformation and quality improvement of China's battery industry.

Experts point out that China's recycling companies must go out and open recycling plants abroad, and recycling their own batteries in China can not only greatly reduce recycling costs, but also ensure the return of resources.

Cao Hongbin, researcher at the Institute of Process Engineering, Chinese Academy of Sciences: First of all, many raw materials for new energy batteries are abroad, many of the batteries are produced in China, and the use of batteries is abroad. Therefore, we believe that it should be a great international cooperation, bring some of our advanced concepts and technologies to foreign countries, and build an industrial chain with a clear division of labor and can give full play to their respective advantages.

Affected by policy adjustments and cost increases, Chinese power battery manufacturers have begun to set up factories overseas. At present, leading companies such as CATL, China Innovation Airlines, Guoxuan Hi-Tech, EVE Lithium Energy, and SVOLT Energy have laid out overseas expansion plans, and most of them have chosen to set up factories in Europe and the United States. At present, Chinese enterprises have built 25 overseas factories, and in addition to direct investment in factories, some enterprises choose to cooperate or acquire foreign companies. These measures will help power battery companies avoid the policy risks of import and export.

Industry reshuffle Standardizing the battery recycling system is key

The restrictive policies introduced by the new European battery law have more requirements for export companies to achieve greening, which will inevitably lead to a reshuffle of the domestic battery recycling market.

Some experts pointed out that stepping up the standardization of the domestic battery recycling system is the key to healthy development.

In the large town of Xinxiang City, Henan Province, the reporter saw that almost every household here is engaged in the dismantling of power batteries, and Xinxiang City has become the most important distribution center for battery recycling in northern China.

At some battery dismantling points, the reporter saw that some batches of waste products were sorted here and reused.

The reporter found that the principle of screening unqualified batteries by villagers is only to see if there is leakage or bulging, and the scrapped batteries selected by visual inspection are used in other vehicles, which will become a major hidden danger to safety. Industry insiders said that although the EU's green policy is a constraint, it can play a role in forcing the domestic non-standard battery recycling channels.

He Ye, Secretary-General of the Beijing Compulsory Resource Recycling Alliance: Although Europe has now introduced a lot of restrictive policies, including the EU battery regulations, it just shows that it hopes that through this policy, these enterprises in its own country can develop, which is actually a green trade fortress for our country. In fact, it is a relatively severe blow to the recycling of non-standard channels, which will lead to a reshuffle in the domestic market.

Compared with foreign countries, although China has also introduced an extended producer responsibility system, there is no clear policy control over the whereabouts of retired batteries. It is understood that the Ministry of Industry and Information Technology began to implement a white list system for battery recycling companies in 2018, and there are currently 5 batches of 156 companies that have been admitted, but the survey found that these companies have invested heavily in environmental protection equipment but are often in a state of basking in the sun or not having enough to eat.

Wang Liqin, general manager of Hangzhou Xieneng Anying Technology Co., Ltd.: If the price is high, then everyone is a business behavior, which has led to a high price of battery cells.

As a result, the cost of recycling waste batteries has been raised, resulting in most of the waste batteries flowing into these small workshops or middlemen, who even purchase and maliciously hoard goods at a premium during battery auctions, which objectively increases the manufacturing cost of new energy vehicles.

Different from the traditional scrapping of automobiles, the residual value of power batteries for new energy vehicles is very high, and the market value can reach more than 8,000 to 15,000 yuan. In order to prevent the flow of scrapped batteries into small workshops, at the end of this year, a public service platform for power battery recycling that can be used for government management, consumers and enterprises will be launched, and consumers can query the geographical location and contact information of more than 10,000 recycling service outlets across the country through this platform.

Hu Song, Senior Engineer of China Automotive Research Institute: I hope that consumers can better realize the value of the battery through this platform, and at the same time, they can better hand over the second battery to the standardized recycling channel, so that we can ensure that the battery can better play its residual value after retirement, and can be better utilized to form a closed loop of the entire power battery cycle.

Dingzhou, Hebei: Take precautions to add value to battery recycling

In the context of the new EU battery law, China's relevant local governments can only avoid falling into passivity in the future international competition by taking precautions.

Dingzhou City, Hebei Province, has actively aligned with international rules to create the country's first city-level asset management platform for the whole life cycle of batteries, maximizing the value of recycled batteries.

The city of Dingzhou in Hebei Province recently partnered with a technology company in Suzhou to launch the country's first battery asset management platform, which serves as a traditional battery recycling and distribution center, because the dismantling of used batteries has made Dingzhou suffer.

Zhang Erwen, deputy secretary of the Party Working Committee of Dingzhou High-tech Zone, Hebei Province: We have a northern circular economy industrial park in Dingzhou, and there is a lithium battery recycling section in the industrial park.

Traditional battery recycling will go through multiple middlemen from the consumer to the remanufacturing of the battery, which also causes various uncontrollable problems in the battery recycling process.

Zhang Weikai, head of the battery asset management platform in Dingzhou City, Hebei Province: The biggest problem is environmental protection, the transaction behavior of middlemen, it has no environmental protection measures.

What's more, the carbon footprint cannot be documented because these intermediaries are unable to provide legal procedures for environmental protection and other aspects.

The battery asset management platform in Dingzhou City is to open up the circulation link of battery recycling, cancel the middleman, reduce the cost of raw materials, and record the important events and data in the whole life cycle of the battery to form a digital ID card that can display key information such as battery manufacturing location, manufacturing method, and carbon emissions in the production process, also known as battery passport.

Zhang Erwen, Deputy Secretary of the Party Working Committee of Dingzhou High-tech Zone, Hebei Province: We are also taking precautions and laying out in advance. Suzhou Bocui is the main enterprise of the lithium battery recycling industry chain, and we have introduced Suzhou Botri to our Dingzhou, laying the foundation for the lithium battery recycling industry in Beijing, Tianjin and Hebei in the future.

With the implementation of the new EU battery law, some leading domestic enterprises and battery manufacturers have begun to consciously adjust the strategic layout of raw materials.

Lin Xiao, founder of Suzhou Bocui Recycling: After the battery is recycled reasonably and compliantly, it will be certified with a certain proportion of recycled materials after entering the new recycled new materials. It can be sold internationally at a higher price.

According to statistics, in 2023, the production and sales of new energy vehicles in China will exceed 9 million, and the volume of battery recycling has accounted for more than 60% of the world. To this end, the Ministry of Industry and Information Technology and other eight departments issued a notice, clearly requiring that the value of battery assets be maximized through the traceability and management of the whole life cycle of the battery, and the asset management platform built by Dingzhou will provide exploration for the construction and operation mode of China's carbon-neutral new energy system.

World-leading Contributing China's experience to the recycling of critical metals

In the laboratory of Suzhou Bocui Cycle, the reporter saw battery waste from different battery companies covering more than 70% of the country's production capacity.

In order to be able to better recycle these battery wastes, the laboratory has developed a technical formula for battery recycling.

Lin Xiao, founder of Suzhou Bocui Cycle: This production line has been used for nearly 30 years, and the traditional extraction technology of the whole battery often uses the extraction and separation of a single element, and after the transformation, we only use less than 1/3 of the extraction stage to achieve the common extraction of nickel and cobalt.

Since 2019, Lin Xiao's team has traveled to various international organizations and academic conferences, providing a steady stream of battery recycling technology and international policy support for the Chinese Academy of Sciences, the Ministry of Industry and Information Technology, the Ministry of Ecology and Environment and other departments. Dr. Lin Xiao saw the challenges and opportunities faced by China in battery recycling, and took the initiative to go out to adapt to the changes in the international situation. He led the technical team to achieve a 99% recovery rate of key metals for new energy vehicle batteries, which is unique in the world.

In the office of Suzhou Nano City, the reporter saw an endless stream of units coming here to negotiate investment in an afternoon.

Wang Yu, head of Suzhou Zhongxin Zhidao Capital: After about 5 years, the production and sales of new energy vehicles in China have increased nearly 10 times, so we think the future growth trend of this battery recycling market is very clear.

Zhang Qian, Senior Deputy General Manager of Shougang Fund: Suppose it is a gold mine, the company that provides these shovels and provides these tools must be the first to come up, and then after this wave, the leading enterprises in these fields will come out, so the order of investment is actually such an order. So we came to Bocui today, in fact, it is also such a big logic.

In the eyes of these investors, the recycling technology of Bocui Recycling is undoubtedly a company that provides a "shovel" for the industry, and international peers have also given a high evaluation of China's key technology in battery recycling.

Daniel, Founder of Singapore Xinling Battery Co., Ltd.: China has developed a lot of advanced battery recycling technologies, technologies that are able to recover a high percentage of valuable materials from batteries, and they have developed processes that are more environmentally friendly than traditional recycling methods, and the recycling rate far exceeds EU standards.

In order to meet the requirements of international trade, we will continue to maintain the first-mover advantage of China's power battery industry. The "Chinese version of the battery passport" jointly developed and designed by the China Automotive Research Institute and leading enterprises in the industry such as CATL and BYD, a battery ID platform will be launched at the end of this year, specifically to help domestic enterprises cope with the EU's new battery policy.

Hu Song, Senior Engineer of China Automotive Research Institute: The ID of this battery is in accordance with the current policy requirements of the European Union, and we will build a platform to serve enterprises and help them create battery passport information. In this way, it can be directly connected with the EU's e-passport platform to help enterprises meet European requirements with minimal burden and help them export.