Technological breakthroughs

Based on the white paper “Powering the Future: Overcoming Battery Supply Chain Challenges with Circularity” published by the World Economic Forum in collaboration with RMI and the Global Battery Alliance, January 2025. Report leads: Pramoda Gode (Global Battery Alliance), Laura LoSciuto (RMI), Anis Nassar (World Economic Forum). Research team: Monkgogi Buzwani, Sudeshna Mohanty, Kriti Singh (RMI). Rewritten in scientific journalism style. No information beyond the source document has been added.

Background and the Urgency for Action

Global demand for electric vehicle batteries (EVBs) is growing exponentially. According to projections by the International Energy Agency (IEA), annual demand could reach 5.5 terawatt-hours (TWh) by 2030 and 9.1 TWh by 2035 under a net-zero emissions by 2050 scenario.

To meet this demand, annual mineral requirements are expected to reach 909 kilotonnes of lithium, 2,590 kilotonnes of nickel, and 247 kilotonnes of cobalt by 2035. However, IEA forecasts indicate that supply from existing and announced mining projects will meet only 39%, 69%, and 62% of projected demand for lithium, nickel, and cobalt respectively. This gap poses a significant risk to the global EV transition.

At the same time, a growing number of batteries are approaching end of life (EOL), requiring adequate infrastructure and policy frameworks to manage them safely and responsibly. Building that infrastructure, enacting policy, and driving systemic change all take years — even decades. The time to act is now.

What Is a Circular Battery Economy?

A circular battery economy is one in which EVBs are used for as long as possible in their original application (“first life”), then reused or repurposed for other applications such as energy storage (“second life”), and finally recycled so that recovered materials re-enter the production chain.

This model has the potential to reduce dependence on virgin mineral extraction, strengthen supply chain resilience, ease geopolitical tensions over resources, expand access to clean energy, and create jobs across diverse geographies. However, the transition must be deliberately designed — with systems thinking and equity principles — to avoid replicating or worsening existing inequalities.

Key Concerns in Today's Battery Value Chain

Lack of transparency across the full value chain

The current EVB supply chain is both geographically concentrated and dispersed. Economically viable mineral deposits are found in only a handful of countries — primarily Australia and Chile for lithium, Indonesia for nickel, and the Democratic Republic of Congo for cobalt — and minerals typically travel to China for processing before being assembled into EVs in China, Europe, or the United States. The total distance traveled from mine to battery cell factory often exceeds 50,000 nautical miles.

This complexity, combined with a lack of harmonized regulations, contributes to an opaque value chain. Without visibility into the origins of raw materials, labor and environmental practices at each stage, and how batteries are managed at EOL, it is not possible to understand or address a battery's social and environmental footprint. For example, the carbon footprint of common lithium-ion battery chemistries ranges from 65 to 100 kg of CO₂ equivalent per kilowatt-hour, depending on material sourcing and the carbon intensity of the electricity grid used in manufacturing — yet no unified disclosure mechanism exists to verify these figures.

Battery design and data access

Batteries today are largely designed to optimize first-life performance, with limited consideration for disassembly, reuse, or recyclability. Permanent bonding techniques such as irreversible adhesives and welding improve structural integrity but make disassembly difficult. The wide diversity of battery designs also raises the cost of assessment, transport, and warranties for second-life applications.

Additionally, data from battery management systems (BMS) — essential for evaluating state of health (SOH) and remaining useful life — is often not shared due to concerns over data privacy and liability.

Challenging economics of recycling and second life

EV battery recycling faces multiple barriers: high upfront capital requirements, insufficient feedstock volumes, and volatile mineral prices that create unpredictable profit margins. The second-life industry is at an even earlier stage of development, and faces additional headwinds as new battery prices continue to fall.

Globally, the volume of batteries reaching EOL is projected to grow from approximately 900 kilotonnes in 2025 to 7,850 kilotonnes in 2035 and 20,500 kilotonnes in 2040. This wave is approaching faster than many anticipate, and continuous infrastructure investment is required starting now.

Inequities in value chain design

The concentration of mineral extraction and processing in a small number of countries creates vulnerabilities in the supply chain. Developing countries — particularly in the Global South — have largely been confined to the raw material extraction segment of the value chain, without access to the higher-value stages of production.

At the same time, many lower-income countries rely heavily on second-hand vehicle imports and will increasingly receive used EVs — and therefore, eventually, EOL batteries — without the infrastructure or regulatory frameworks needed to manage them safely. Without proper facilities and trained workers, the risk of informal recycling, landfilling, or stockpiling is real, with serious consequences for environmental and public health.

Workforce development and transition needs

The workforce needed to operate a circular battery economy — including collection, sorting, disassembly, repair, and recycling — has not yet been adequately developed. At the same time, the shift toward circularity will reduce demand for raw material extraction, requiring active support for workers in affected industries to transition into new roles.

Policy Recommendations

The report proposes five priority areas for action.

1. Develop standardized, interoperable track-and-trace platforms

Tracking systems follow a battery from manufacture to its EOL management facility; tracing systems follow battery materials from their origin through the full value chain. Together, these approaches provide the transparency needed for responsible decision-making and accountability. A digital product passport (DPP) — which integrates both functions — is already required under EU regulation for light-duty vehicle and industrial batteries by 2027. However, global harmonization of data standards is essential to ensure interoperability across borders and jurisdictions.

2. Set design and data standards; fund R&D for battery design innovation

Batteries must be designed with simultaneous consideration for first-life performance, disassembly, reuse, and recyclability. This requires international design standards, supportive policy, and R&D investment from both public and private sectors. Clear frameworks for sharing BMS data among value chain stakeholders — accompanied by appropriate data protection measures — are also needed.

3. Use targeted policy interventions to address economic and technical barriers

A range of policy tools can help overcome the economic and technical challenges facing recycling and second-life industries, including: extended producer responsibility (EPR) to ensure manufacturers bear the costs of EOL management; right-to-repair regulations to facilitate reuse and repurposing; material recovery targets and recycled content mandates to support recycling markets; and financial incentives for recyclers and second-life providers during the scale-up phase. Policies must be flexible enough to keep pace with rapidly evolving battery chemistries and recycling technologies.

4. Develop regional circular value chains within a global circular economy

More countries need to participate in the battery value chain, rather than limiting involvement to a small number of economies. This includes building collection and recycling infrastructure in regions with growing EV adoption, combined with international development investment targeted at emerging economies. At the same time, import and export regulations for used EVs and batteries must be harmonized to prevent the transfer of EOL management burdens onto countries that lack the capacity to handle them. Kenya's 2024 regulation banning imports of used EVs with a battery SOH below 80% offers a relevant example of performance-based import policy.

5. Invest in the workforce for a circular battery economy

Workers across new segments of the value chain — particularly those involved in collection, disassembly, diagnostics, repair, and recycling — need training and certification. Governments, industry, and educational institutions must collaborate to develop standardized training curricula. Proactive support for workers in raw material extraction industries to transition into new roles is equally important, with the principles of just transition serving as a guiding framework.

Case Study: The Full Value of Battery Recycling

RMI conducted a triple-bottom-line analysis assessing the financial, environmental, and social benefits of EVB recycling simultaneously. The findings show that even when mineral prices are low, battery recycling generates a net positive impact on society. When currently unaccounted-for environmental and social externalities are factored in, the return on investment of battery recycling can substantially exceed that of conventional mining. Estimated total system-level benefits from recycling through 2040 — based solely on US feedstock volumes — range from USD 5.9 billion to USD 14.4 billion.

Case Study: Challenges Faced by a Small Island Nation

Bermuda — a British Overseas Territory in the Atlantic Ocean with a population of approximately 60,000 — is actively electrifying its public transit and government vehicle fleet. However, the island faces unique challenges: it is located more than 1,000 kilometers from the US mainland, has no local recycling infrastructure, lacks the economies of scale needed to make EOL management cost-effective, and faces very high battery transport costs due to fire and safety regulations. Bermuda is currently evaluating options including pre-shredding batteries on the island before export, or shipping whole batteries to overseas recycling facilities. This case illustrates the difficulties that many small or remote markets will face as the wave of EOL batteries arrives.

Conclusion

The world stands at an inflection point in the transition to electrified transport, and the decisions made today will shape the battery supply chain for decades to come. The challenges identified in this report — from insufficient transparency and poor design for circularity, to difficult recycling economics, geographic inequity, and workforce gaps — are real but surmountable.

By building standardized track-and-trace systems, driving battery design innovation, deploying targeted policy support, developing regional value chains, and investing in the workforce, stakeholders around the world can progressively build a circular battery economy that serves the goals of climate action, social equity, and economic growth.

Source: “Powering the Future: Overcoming Battery Supply Chain Challenges with Circularity,” World Economic Forum, RMI, and Global Battery Alliance, January 2025. Project leads: Pramoda Gode (Global Battery Alliance), Laura LoSciuto (RMI), Anis Nassar (World Economic Forum). Research team: Monkgogi Buzwani, Sudeshna Mohanty, Kriti Singh (RMI). Rewritten in scientific journalism style for informational purposes. No information beyond the source document has been added.