Battery recycling is often not yet profitable

August 28, 2026

Source: E & M powernews

The HHL Leipzig Graduate School of Management sees Europe’s battery recycling industry under economic pressure. Transportation and dismantling, in particular, are costly.

The recovery of raw materials from end-of-life electric vehicle batteries is technically mature, but often not yet economically viable for recycling companies. This is the conclusion of an interim report by the HHL Leipzig Graduate School of Management. The private university-affiliated business school, based in Leipzig, is examining the economic conditions of a battery circular economy as part of the EU research project “SAFELOOP.”

According to the research team’s calculations, a recycling facility currently incurs a loss of approximately 1.90 euros per kilogram of battery pack when it sells the recovered raw materials at market prices. According to HHL, transportation costs are a major reason for this: Removed lithium-ion batteries are classified as hazardous materials. Transporting them costs, on average, 16 times as much as transporting regular freight. Furthermore, the study found that companies specializing exclusively in battery recycling perform worse financially than more diversified companies.

The researchers explain that these costs could become even more significant in the future. Under the EU Battery Regulation, starting in August 2031, a certain minimum percentage of the raw materials used in new vehicle, industrial, and starter batteries must come from recycling. HHL has used a model to calculate what the consequences of this might be. Assuming a recycling rate of 20 percent and a full pass-through of current recycling losses, the cost of a battery pack would increase by about 6 percent.

A Second Life Increases Battery Value

The research team sees economic potential in the continued use of end-of-life vehicle batteries. For example, if the battery from an electric bus is subsequently used as a stationary energy storage system, its total economic value over its useful life increases by 64 percent, according to the study. However, it is primarily vehicle and storage operators who benefit from this additional value. Manufacturers, who bear higher costs for recycling, do not automatically receive a corresponding share.

Second-life batteries also face hurdles. According to HHL, eight expert discussions point to factors such as costs, safety concerns, and investors’ risk assessments. In addition, reliable data on battery condition and long-term warranties, among other things, must be available.

Researchers See Significant Potential for Cost Savings

The interim report identifies several approaches to make recycling more economical. These include safer battery designs, shorter transport routes, more automated disassembly, specialized recycling facilities, and mandatory transport standards. According to HHL’s calculations, these measures combined could reduce recycling costs by approximately 34 percent. This would turn the current loss of 1.90 euros per kilogram of battery pack into a profit of 13 cents.

The research team also identifies a distribution problem among manufacturers, operators, and recycling companies. It therefore proposes new coordinating entities that would manage battery packs across multiple life cycle phases and allocate costs and revenues among the stakeholders.

Study leader Dima Smirnov, a postdoctoral researcher at HHL’s Chair of Innovation Management and Entrepreneurship, believes that, in addition to improved technical processes, new business models are also necessary. In his view, these models should help make the circular economy economically viable for the participating companies.

“SAFELOOP” is funded by the European Union. Fifteen institutions from eleven countries are participating in the project, which began in 2024 and is scheduled to run for 36 months. According to HHL, the budget is approximately 4.7 million euros.

Author: Davina Spohn