With so much speculation surrounding EV batteries, the question is when to expect to see them entering our yards? We recently spoke to Dr Jarkko Vesa, CEO & Founder of consulting company, Not Innovated Here www.notinnovatedhere.fi about this topic where a similar question had been asked about Finland. Dr Vesa provided us with the following:
A Systemic View of the Evolution of Electric Vehicle markets and EV battery recycling – case Finland
Three years ago, our consulting company was contacted by Finnish Car Recycling Ltd. www.autokierratys.fi/en which is the producer association coordinating the collection, treatment and recycling of End-of-Life vehicles (ELVs) in accordance with the requirements laid down in the ELV Directive. The members of Finnish Car Recycling are importers of new and used vehicles. The company had made a decision to register also as a producer association for electric vehicle traction batteries. Our assignment was to assist them in building the operational model for EV battery take back and recycling in Finland.
Dieselgate changed the EV market
The world of electric vehicles looked very different in spring 2015 when the project started. When we interviewed car importers, there were several OEMs who, at the time, did not have any clear plans or schedules for introducing electrified vehicles in the Finnish market. However, in September 2015, the Volkswagen emissions scandal changed the world. Diesel engines got lots of bad publicity in the process, and both car buyers and car manufacturers started to look for other alternatives for the future.
Understanding the “installed base” of electric vehicles
In order to understand the size and nature of the Finnish EV market, we started to analyse the existing EV base on the roads. One of the first surprises was the large amount of Hybrid Electric Vehicles (HEV) with NiMH batteries on the roads in Finland. The reason for this was Toyota’s strong foothold in the Finnish market. The situation is very similar to the EV markets in Belgium, where over 64 % of hybrid, plug-in hybrid or electric vehicles registered between 2008 – 2016 are equipped with NiMH batteries (Catherine Lenaerts, Febelauto, March 2018).
Another surprise was the very limited number of Battery Electric Vehicles (BEV) in Finland. Out of the 2.7 million passenger cars and 0.3 million vans (approx.) on the roads, only a few hundred vehicles were battery electric vehicles.
Long life of EV batteries
From a battery recycling perspective, it turned out that EV batteries were very reliable and they appear to last almost the full life of a vehicle. In Finland, the average age of cars on the road is 11.6 years. The majority of the very first hybrid electric vehicles were still on the road, so even the representatives of car manufacturers had difficulties in estimating, what is the expected lifecycle of the battery. In hybrid vehicles it didn’t matter so much if the battery lost part of its performance or capacity due to the extended usage.
The problem: Nothing to recycle
The conclusion of the interviews and data analysis was that it will take years before there will be any serious volumes of EV batteries available for recycling in Finland. The number of EV batteries reaching the end of their lives annually has been very low in Finland during the past years. There have been a few cases where an electric vehicle has been in such an accident that the battery has been damaged and replaced according to the safety policy of the OEM. There have also been some occasions where the OEM has exchanged the battery pack or cells as a precaution.
OEMs want their batteries back
One distinctive characteristic of the EV battery recycling market in Europe is that most of the OEMs want their End-of-Life EV batteries back, in case there is some reason to change the battery pack. This is understandable, as the costs of EV battery packs are high, especially in Battery Electric Vehicles (BEV) and Plug-In Hybrid Electric Vehicles (PHEV). We also got the impression that, for competitive and safety reasons, OEMs did not want to leave their end-of-life batteries circulating in the second-hand or recycling markets. However, there were some OEMs who did not have this kind of factory-driven take-back process in place. Their end-of-life EV batteries where treated locally by companies handling hazardous waste.
The current OEM-driven model is rather costly especially in sparsely populated, geographically remote countries such as Finland. One additional challenge for the Finnish market is that Finland is practically an island, when looked from a Central European perspective – especially when keeping in mind the restrictions for transporting damaged lithium-ion batteries by sea. It will be interesting to see, what the policy of OEMs will be in the future. There is high demand for 2nd life EV batteries in Europe, so our prediction is that OEMs and other parties interested in the end-of-life EV batteries will fight for the good ones that can be re-used or remanufactured.
China and Norway as role models
During the past 12 months, the situation in the electric vehicle market has changed rapidly. EV sales figures show impressive growth rates. For instance, in Finland, the sales of battery electric vehicles increased in 2017 by 125%, and the sales of plug-in hybrids by 111%. This has led the media to conclude that there are signs of a revolution in the automotive markets.
OEMs are competing by who makes the boldest statements of the future of electric vehicles in their product portfolios in the coming years. Likewise, many market research companies are predicting a rapidly growing market share for electric vehicles.
The Chinese market provides strong evidence that it is possible to sell large volumes of EVs, if the conditions are right. And in Europe, Norway gives hope to those who would like to see European countries to move quickly to a plug-in world. According to Statista, 579,000 plug-in electric passenger cars were sold in China in 2017. In the U.S. and Norway, the figures were 199,286 and 58,190 cars respectively. But an even more impressive achievement is the percentage of plug-in electric passenger cars sold in Norway in 2017, a staggering 36.7% of total sales. Even in China, where the absolute number of cars sold is huge, the share of plug-in electric passenger car sales in 2017 was ‘only’ 2.3%. Norway is clearly in a totally different league than all the other countries in the world.
To buy or not to buy – that is the question
So why do people buy electric vehicles so eagerly in Norway, and less so in many (or most) other countries? The Norwegians have found the secret formula for increasing the EV penetration very rapidly: Electric vehicles need to be cheap to buy, cheap to use and convenient to use (Sture Portvik, City of Oslo, 2017).
Let’s take a closer look at the drivers and hinders of electric vehicle market growth. Unlike in many other novel technologies, the key drivers of EV penetration are not directly related to the actual attributes of the electric vehicle itself. Naturally the new technology provides nice features and benefits such as low maintenance, smooth and quiet drive, and overall convenience of an electrified vehicles. However, as the critical success factors identified by the Norwegians demonstrate, it is more about the cost savings (free parking, no/lower VAT or import tax, no ferry charges etc.) or other benefits, such as the ability to use bus lanes or free parking.
Or if we consider the reasons NOT to buy an electric vehicle, typical reasons are purchase price (according to a report by Clean Technica in 2017, high purchase price is the #1 reason for not buying an EV) and lack of sufficient charging coverage. Also, the drive range of the current battery electric vehicles (BEV) is a showstopper for many buyers.
A systemic approach
In order to better understand the key drivers and hinders of the electric vehicle market growth in Finland, we have started to build a systemic view of the Finnish EV market. This is a challenging exercise as there is a plethora of potential variables for the model, and the availability and quality of data is far from perfect. However, compared to our earlier work with electronics recycling, or the recycling of various other types of large industrial batteries (e-bikes, e-scooters etc.), there is one big advantage in dealing with cars: most of them can be found in the national vehicle registration database. This gives us good visibility into the existing electric vehicle base in the country.
The objective is to use the forthcoming model to find answers to the following questions:
- What is the ‘installed base’ of electric vehicles in Finland?
- Which types of traction batteries (NiMH, Li-Ion) are they using?
- What kind of volumes can we expect for EV battery recycling in the coming years?
- What kind of costs can we expect from the recycling of these batteries?
A highly unpredictable market
What makes the Electric Vehicle Market particularly challenging are the objectives of the government to lower the CO2 emissions according to the Paris climate agreement, and the ambitions of various EU countries and their politicians to profile themselves as the leaders in the electric traffic revolution. This can have a strong and unpredictable impact on the automobile landscape and market situations in various national markets. Recent examples of this are the political decision related to older diesel cars in Germany and Sweden.
Another unpredictable element is social media. In Finland we have a small but highly active group of electric vehicle owners (or wannabe owners) who have a clear mission to convert all the “dinosaur” car owners (i.e., the owners of traditional internal combustion engine cars) to electric vehicle owners or users. During my career of over 30 years in the ICT industry I have never seen this kind of religious attitude to an emerging technology. It will be interesting to see, what kind of role this will play in the diffusion of electric vehicles. At the end of the day, the proponents of electric vehicles feel they are fighting to save our planet, and that this war will be won one vehicle at a time.
If you would like to know more, please visit the website at www.notinnovatedhere.fi/fi
Image: Dr Jarkko Vesa, CEO & Founder of consulting company, Not Innovated Here