BYD Set to Open Lithium-ion Battery Recycling Plant

Chinese carmaker BYD (SHA:002594) is on track to open a lithium-ion battery recycling plant in Shanghai in the second quarter to reduce raw materials costs and address battery waste.

BYD’s brand communication manager, Mia Gu, confirmed the company’s plans to Reuters, but said a start date has not been fixed yet. She did not provide details about the capacity of the plant or the amount of investment involved.

Demand for the lithium-ion batteries used to power electric vehicles (EVs) is expected to increase in the coming decades. As a result, the need for key components, such as lithium and cobalt, is also expected to soar.

In fact, the move comes at a time when lithium prices have been surging and cobalt has almost doubled its cost from a year ago. But Gu said on Wednesday (March 21) that the most important factor driving the decision is environmental protection.

According to Reuters, the first batch of electric car battery waste will hit the market this year. Furthermore, total battery waste is forecast to reach 120,000 to 170,000 tonnes per year by 2020.

“As a leading EV maker, you have a social responsibility to recycle the battery,” Gu said.

BYD’s battery recycling plant comes as no surprise since China, the leader in the electric car space, continues to implement measures to fight pollution. In February, the government issued new rules making car manufacturers responsible for setting up facilities to recycle used batteries.  

Earlier this month, the Asian country, which is pushing for all-electric battery cars and plug-in hybrids to account for at least one-fifth of its overall vehicle sales by 2025, outlined plans to start electric car battery recycle programs in four regions.

As part of the program, EV makers will explore ways to set up a system to recycle used EV batteries. Meanwhile, local governments will provide policy supports, including industrial funds for the trial, the Ministry of Industry and Information Technology said in a document.

On Thursday (March 22), shares of BYD closed down 1.7 percent at CNY 62.59.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.