From Battery Use to Recycling: The Auto Industry Needs a Circular Rethink

At the recent EVS38 conference in Gothenburg, I found myself the lone dissenter on a panel when moderator Mattias Goldman posed what seemed like a straightforward question:

Could circularity give the European automotive industry a competitive advantage?

My answer was simple: No.

Not because I think circularity—reuse, recycling, remanufacturing—is unimportant. Quite the opposite: it’s essential. But we need to be honest about what circular practices are good for—and what they’re not. Circularity supports sustainability and efficiency. What it rarely does, however, is drive consumer demand or offer companies a true competitive edge in global markets.

Panel discussion at EVS38: Can Scandinavia and Europe Drive the Future of Circular Vehicles?

Circularity Adds Value—But Rarely Drives It

Take Waymo or Tesla’s robotaxi concepts. These are models of circular thinking: high vehicle utilization, centralized ownership, battery lifecycle control, and streamlined materials use. From a sustainability perspective, they’re brilliant. But consumers won’t choose a robotaxi because it’s circular—they’ll choose it because it’s cheaper, easier, and more convenient than owning a car.

Consider Nio’s and now CATL’s battery-swapping technologies. These systems monitor battery health and, in CATL’s case, even optimize battery size based on the user's needs. That’s true resource efficiency. But again, convenience—not circularity—is the key selling point.

Polestar, whose circular lead Sofia Andersson sat beside me on the panel (together with Ole-Christen Enger from Hydrovolt and Andrzej Kublik from QSense), is a great example of a brand committed to circular design and environmental transparency. Their vehicles are thoughtfully engineered with sustainability in mind. But people buy Polestars because they’re beautifully designed, high-performance EVs. The sustainability credentials are likely a strong bonus but not the main motivator.

We must stop equating circularity with competitive differentiation. At best, it supports a company’s broader value proposition. At worst, it becomes a box-ticking exercise that distracts from real innovation.

Recycling Isn’t the Holy Grail

A common tendency among policymakers—especially in Europe and North America—is to overemphasise recycling when discussing circularity. Yes, recycling is important, which not least ealrier mentioned companies like Hydrovolt and QSense clearly demonstrate. But it’s the final stage in a much longer product life cycle. It should be the last resort, not the central strategy.

It takes decades for EV batteries to return for recycling, and when they do, they may be outdated in terms of chemistry and design. Often, they’re exported to other markets, which means the value and control for companies in the original market are lost entirely. Still, we’re seeing huge investments in battery recycling infrastructure, sometimes before building out viable battery manufacturing ecosystems in Europe or the U.S. It’s putting the cart before the horse.

Asia—especially China and South Korea—dominates battery manufacturing and processing because they began decades ago. They need recycled materials because they already use them. Europe and North America, by contrast, are still catching up in cell manufacturing, cathode production, and precursor development. Without upstream capability (or downstream, viewed from recyclers), any recycled material we generate is likely to flow back to Asia.

And then there’s the geopolitical fantasy: that recycling can help us become independent from China, or worse, that it can replace mining altogether. These ideas aren’t just misguided—they’re fundamentally wrong.

Only around 5% of the global vehicle fleet is electric, and about half of that was added in the last two years—mostly in China. Even if we recycled every one of those vehicles, we’d barely produce enough materials for the same 5% of the fleet—and realistically, it would be a bit less due to material losses and larger battery sizes in newer EVs.

Where does the rest come from? No, not your phone—you’re likely planning to keep using that. We still need to mine. To pit recycling against mining is to cut off the branch recyclers are sitting on.

The Real Value Lies Earlier in the Loop

Our research shows that the most value in the battery lifecycle is created before recycling: mainly through extended use, but also through reuse, repurposing, and second-life applications. These are areas where companies in Europe and North America could still lead, by leveraging their strengths in services, systems innovation, and grid integration—at least in their own markets and potentially globally.

Take Octopus Energy’s recent deal with BYD. Customers who plug in and make their vehicles available for grid services can get free charging. If this saves £620 ($785) annually, that battery generates more value over a five-year lease than BYD likely paid to manufacture it—for the customer.

Tesla’s future robotaxi platform is another example. Tesla owners can opt into making their vehicles available for shared use, a model once pioneered by Geely's Lynk & Co, albeit with a driver still behind the wheel. It’s a utilization model, not unlike Apple’s App Store strategy. Today, over 50% of Apple’s profits come from services and app commissions. That's truly circular, as it encourages the computer and phone maker to keep as many iPhones and MacBooks in use as possible, even in the secondary market.

Aging Cars, Rising Insurance, and the Missed Opportunity in Repairs

One often overlooked barrier to car ownership is insurance. The average premium in the U.S. is now nearing $3,000 per year—nearly double what it was a decade ago. The main culprit? Rising repair costs. But these costs are often virtual: vehicles are written off instead of repaired because the economics don’t add up.

Ideally, auto salvage would step in—providing affordable used parts to lower repair costs. But instead, we see more vehicles—especially EVs—exported to markets like Eastern Europe, where they are repaired and kept in use. It’s a great example of global circularity and demonstrates that it’s possible to repair even premium vehicles and resell them at competitive prices. But in markets like the U.S., Canada, France, and Germany, this results in fewer affordable vehicles and fewer local jobs—both from repairs not being made and from salvaged parts not being utilized.

The irony? Both U.S. and EU vehicle fleets are aging. This is largely due to fewer new car sales (if we don’t make babies, the average age of the human population also increases). The shift to premium vehicles among automakers has extended the lifespan of many smaller cars, as people can’t afford to buy new ones. Our research shows that in the UK, for instance, 20% of vehicles are still on the road after 20 years. And yet, many jobs today—like those held by some 10 million Americans working in gig platforms such as DoorDash and Uber Eats—depend on access to a car. It doesn’t need to be new, just functional. The result is that many older Toyota Priuses and Honda Civics are doing a lot of miles late in their lives.

From a circular perspective, this is a good thing. Older vehicles support markets for repairs, salvage, and parts reuse. What we need now is to ensure more of those older vehicles are electric.

Toyota Prius batteries prepared for remanufacturing. The Prius has been a success story in creating local jobs for remanufacturing companies and workshops. For EVs, the current outlook looks very different

Why Aren’t More EV Batteries Reaching End of Life?

In our latest Battery Lifecycle Report, we show that the reason we don’t see more batteries reaching end of life from EVs is not due to silly and baseless reasons such as diversion to landfill (can we stop talking about preventing batteries from going to landfills, please?). Nor is it because they go to reuse or repurposing—the batteries are simply still in the cars. Add to that the increasing number of electric cars reaching new markets instead of being dismantled, and you start to see why potential recycling feedstocks dry up before they even emerge.

The problem for recyclers is that they can’t do anything about this. The cars—even the damaged ones—are owned by insurance or salvage companies that need to recoup every dollar or euro they possibly can. If the EV-hungry market in Ukraine (20,600 EVs registered this year alone, surpassing Portugal, Switzerland, and Finland—mostly used imports) is paying more, that’s where the vehicles will go.

And to rip out batteries from happy users will just not happen. As long as there is no heathy replacement market that is.

Early EVs in UK compared to models where we have been able to identify their unique year they have been placed on the market. Data from CES/DVLA

The Way Forward: Utilization, Innovation, and Local Value

But the battery replacement market could be more healthy. Just like other stages in the battery lifecycle chain. It's time to reframe the narrative. Circularity isn’t just about extracting atoms from spent products. It’s about extracting value across the product’s life.

If we emphasized EV and battery repairs as much as battery recycling, we might see significantly lower insurance premiums, greater access to clean vehicles, and stronger demand at dealerships. We could grow workshop employment and build a more robust auto salvage and dismantling industry.

That means building systems that maximize utilization, extend lifespan, and align ownership with performance. Think: modular design, leasing models, fleet operations, and AI-driven maintenance.

This is where innovation and hard work are needed. Just as photovoltaic cells have become the cheapest part of a solar installation, the same is happening with EVs and batteries. If companies have a strong case for producing cells in Europe and North America, we should support them—but the best way to do that is by removing barriers to demand. The beauty is that these service- and application-centered innovations are difficult to outsource. And eventually, this would also benefit reuse, repurposing, and recycling industries through greater demand for battery replacements, repurposing of replaced batteries, or, when necessary, recycling.

Just like we used to do in the auto industry—which, in my view, is the most circular industry in the world. Except for the fuel.