The US auto salvage sector prepares for an upcoming influx of scrapped electric vehicles

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The shift toward electrification in the automotive industry impacts not only car manufacturers and their employees but also the businesses that handle vehicle dismantling and recycling.

The auto salvage and scrap sectors have long dealt with dismantling traditional gasoline-powered cars, salvaging parts ranging from camshafts to hubcaps for resale or scrap metal. Now, they face the challenge of adapting to the increasing numbers of battery-powered electric vehicles (EVs) reaching the end of their lifespan.

Despite the current small volume of EVs being recycled, the growing sales of these vehicles will gradually alter the workflow in salvage yards. Approximately 5 percent of the 285 million cars on U.S. roads meet their end every year.

The auto salvage industry comprises various players, from small family-owned businesses to publicly traded giants like Copart, Insurance Auto Auctions, LKQ, and Boyd Group Services. These companies collectively generated over $21 billion in revenue last year.

The unique aspect of EV recycling is the need for these salvage businesses to find new buyers for the valuable battery component and develop novel approaches to assess its condition and handle it safely. As the battery holds a significant portion of the EV’s value, recycling dynamics are likely to change, potentially leading to separate auctions for batteries for alternate uses like powering household appliances.

The longevity of a car on U.S. roads spans about two decades, so the urgency to address battery disposal is not immediate. However, industry leaders are already contemplating solutions. LKQ, for instance, signed an agreement with Korea Zinc to explore a joint venture for EV battery recycling.

Businesses in the U.S. salvage industry can gain insights from Norway, where a substantial portion of new cars sold are electric. Salvage companies in Norway have successfully repurposed used EV batteries for agricultural equipment and boats, demonstrating potential applications beyond the automotive sector.

For salvage yards accustomed to processing conventional vehicles, the emergence of EVs requires operational adjustments. Companies like M&M Auto Parts have introduced measures to handle EVs safely, including physical separation in the yard, precautionary labeling, and the use of grounded tools during disassembly to prevent electrical mishaps.

As the composition of EVs involves more aluminum and copper compared to traditional steel-dominated vehicles, the scrap metal market is also affected. This shift necessitates more intricate extraction processes for valuable materials, impacting the cost dynamics for salvage businesses like Sims Ltd.

Despite the challenges, industry players are gearing up for the future. Adapting to these changes is imperative, as ignoring them would not be a viable strategy for the evolving landscape of the auto salvage and recycling industry.