SAFELOOP Study: Europe's Battery Circular Economy Needs New Business Models to Succeed

While the technology to recover raw materials from electric vehicle (EV) batteries is mature, Europe’s recycling industry is currently losing resources and capital during the process. A new interim report published by our project partners at the HHL Leipzig Graduate School of Management reveals the main bottlenecks: expensive hazardous goods transport, complex dismantling, and uncertain material recovery.

The HHL report shows that if a recycling plant sells recovered raw materials at market prices, it faces a loss of approximately €1.90 per kilogram of battery pack. Because used lithium-ion batteries are classified as dangerous goods, transport costs are 16 times higher than standard freight. With the EU Battery Regulation mandating a minimum recycled content starting in August 2031, these recycling losses could ultimately drive up the cost of new battery packs by around 6%.

The Value of a Second Life: The study points to second-life applications—such as repurposing depleted EV bus batteries as stationary power storage—as a way to increase the economic value of a battery by 64% over its lifespan. However, this added value currently benefits vehicle and storage operators, leaving manufacturers to bear the high costs of recycling.

A Path Forward: To solve this distribution problem, the HHL research team recommends a combination of safer battery designs, shorter transport routes, automated dismantling, and binding transport standards. Together, these measures could reduce recycling costs by roughly 34%, turning the €1.90 loss into a €0.13 profit per kilogram.

Furthermore, the study advocates for new "coordination actors"—entities that would own and manage the battery packs across all life phases, ensuring that costs and revenues are distributed fairly between manufacturers, operators, and recyclers.

Developing market-based business models that make circularity economically viable is a core objective of the SAFELOOP consortium. Read the full press release from HHL Leipzig Graduate School of Management to learn more about how our 15 partners are working to build a safer, more sustainable, and competitive European battery ecosystem.