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U.S. companies are rushing to get in on a lucrative new kind of 'boom' — here's how it could affect car prices

"We need to keep those valuable materials."

EV battery recycling incentives, Ramping up in the U.S.

Photo Credit: iStock

Electric vehicle battery recycling is ramping up in the United States in a big way thanks to a provision in the Inflation Reduction Act, according to Reuters.

Although electric vehicles are much less harmful to our planet than fossil fuel-powered cars in terms of net impact, they are not without their drawbacks — and many of those drawbacks are centered on their batteries. In addition to being one of the most expensive components to produce, EV batteries are also harmful to the environment as they require mining for lithium and other rare metals.

All of that is why recycling EV batteries is so vital to the continued growth of the industry, and why the IRA — which offers consumers an up to $7,500 tax credit for purchasing a new EV made in the United States — is incentivizing car companies to make their batteries out of recycled materials. 

Vehicle battery materials count as being sourced from the U.S. (and therefore qualify EVs for this portion of the full tax credit) as long as the batteries were recycled in America, regardless of where they were made originally, Reuters reported

That has kicked off what Reuters described as a "U.S. factory building boom." While until now, China has dominated the field of EV battery recycling, North American companies are working quickly to catch up and create "closed-loop supply chains."

Two such companies are Canadian company Li-Cycle, which received a $375 million loan from the U.S. government to build a battery recycling factory in Rochester, New York, and Redwood Materials, which has received a $2 billion loan from the U.S. to build a facility in Nevada. 

As the industry continues to scale up, many companies are seemingly putting their money where their mouths are when it comes to EV battery recycling.

"What [the IRA] does is change the demand equation for battery materials," Mike O'Kronley, CEO of Ascend Elements, another battery recycling company based in the U.S., told Reuters. "We need to keep those valuable materials ... so we can put them right back into EVs."

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