Systemic risks in the EV battery value chain

EV adoption is surging — approximately 20% of new cars sold worldwide were electric in 2024, totalling more than 17 million vehicles globally (p.15). The global EV market is forecast to grow from approximately USD 892 billion in 2025 to over USD 2.1 trillion by 2032 (p.15). However, today’s EV battery value chain remains largely linear, material-intensive, and geographically concentrated.

Five systemic risks are identified: supply-demand gap, environmental risks, social risks, product and system inefficiency, and supply chain bottlenecks. A typical EV contains over 200 kg of critical minerals — around six times more than an internal combustion engine vehicle (p.15). Achieving net zero by 2050 requires a six-fold increase in production of these minerals from 2022 levels (p.15). Price volatility could cause hikes of potentially up to 40% to 50% in the event of a sustained battery metals supply shock (p.18).

A system-level transformation towards a circular EV battery economy

A circular economy vision for EV batteries is centred on four core pillars: maximising mobility and energy storage services; keeping batteries at their highest value for as long as possible; keeping materials in circulation through high-quality recycling; and fairly distributing value generated.

Five circular loops are identified: intensive use and access; life extension through repair, refurbishment, and remanufacture; cascading use into second-life applications; high-quality recycling and material recirculation; and information exchange. These operate across three levels of action: product and component design, business models, and systems.

International cooperation must enable developing countries to fully participate in the circular supply chain, moving beyond exporting low-value raw materials.

Five bright spots to advance circular EV battery leadership

Developed through structured industry engagement with more than 30 organisations, five bright spots for strategic circular economy action were identified.

Design batteries for circularity, not disposal — introduce modular pack architectures, debonding solutions, and integrated diagnostics. Modular designs have been shown to improve overall recyclability by 15–20% (p.53), and specific design features can lower end-of-life processing costs by up to 75% per pack (p.53).

Rethink battery service within optimised energy-mobility systems — rightsize batteries according to realistic usage profiles. A 20% reduction in average battery size would reduce global annual demand for batteries and minerals by 28% in 2035 (p.63).

Scale circular business models — expand Battery-as-a-Service, Material-as-a-Service, upgrade and maintenance subscriptions, performance-based warranties, and structured second-life offerings.

Build and co-invest in regional circular infrastructure — treat collection, triage, repair/remanufacture, repurposing, and recycling as core infrastructure; de-risk capacity via shared investment models and long-term contracts.

Make the circular operating system work — deploy interoperable battery passports and common data standards, align definitions, and strengthen assurance mechanisms so secondary markets can function at scale.

Deep-dives and case studies across the three levels of action

It is estimated that 92% of modules in failed battery packs in warranty are still considered functional (p.55). Recycling retired batteries could supply 60% of cobalt, 53% of lithium, 57% of manganese, and 53% of nickel of lithium-ion batteries globally in 2040 (p.57). Recycled minerals release approximately 80% less GHG emissions than virgin materials from mining (p.57).

Case studies cover GRST and Bostik debonding solutions, DHL EV battery logistics, the Altilium and JLR partnership on recovered-material batteries, and CATL’s Choco-Swap ecosystem combining BaaS with grid-integrated swapping.