Bee in the bonnet: Now, Siam objects to battery recycling rules

The Society of Indian Automobile Manufacturers (Siam) has warned that battery-recycling targets mandated under the government’s rules could raise electric vehicle (EV) prices by 3-5 per cent and hurt sales in the country.

 

Raising the matter with the Central Pollution Control Board (CPCB), Siam said the current battery recycling framework would require EV manufacturers to collect 70 per cent of batteries after eight years of use, despite lithium iron phosphate (LFP) batteries used in electric cars having much longer lifespans.

 

The industry body first raised the issue with the CPCB in a letter sent in November last year and reiterated its concerns during a meeting with Union Environment Minister Bhupender Yadav last month. The CPCB functions under the Ministry of Environment, Forest and Climate Change (MoEFCC).

 

Business Standard has reviewed the letter and also gathered details of the meeting from industry sources.

 

According to Siam, compliance with the current framework could add ₹8,000-25,000 to the cost of an average 35-40 KiloWatt-hour (Kwh) electric car battery, apart from expenses related to collection, storage, handling and traceability systems.

 

Siam’s concerns come amid wider industry criticism of the Battery Waste Management Rules (BWMR). Earlier this week, Panasonic Energy India warned that it could be forced to shut its only dry cell zinc-carbon battery manufacturing facility in the country if the rules remained unchanged, saying compliance costs could exceed profits and that recycling obligations in some cases were higher than the value of the raw materials recovered. The company also said the rules did not adequately distinguish between battery categories with different chemistries.

 

Siam has requested the CPCB to simplify the battery recycling framework, arguing that the current rules impose metal-specific recovery targets without adequately accounting for recycling losses and differences in battery chemistries.

 

The industry body said the Centre’s approach could create a mismatch between recoverable materials’ availability and the obligations placed on producers, and an increase in compliance costs despite companies investing in collection and take-back systems. The ministry and Siam did not respond to Business Standard queries on the matter until the time of publication.

 

Under the BWMR, producers — including automakers, battery manufacturers, importers and brand owners — are required to ensure that used batteries are collected and sent for refurbishment or recycling under the Extended Producer Responsibility (EPR) framework.

 

For EV batteries, manufacturers must begin collecting batteries after eight years and recover 70 per cent of batteries sold in a particular year.

 

The target will gradually increase, with producers eventually required to ensure that 82 per cent of such batteries are collected, refurbished or recycled through authorised entities.

 

Siam said the current framework fails to account for differences in battery lifespan and usage patterns. It argued that LFP batteries, which are increasingly being adopted in electric cars, can remain operational beyond eight years and may continue to be used in second-life applications after their automotive use ends.

 

The industry body said mandating producers to collect 70 per cent of such batteries after eight years could create negative consumer sentiment by suggesting that battery replacement is required at that stage. Since batteries account for a significant share of an EV’s cost, Siam said the rule could weaken the economics of EV ownership and slow adoption.

 

“With the current EPR prices mentioned, the cost of EPR prices for an average 35-40 kWh four-wheeler EV battery will be between ₹8,000 to ₹25,000. On top of this cost, producers will have to invest in collection, storage, handling, resources, developing traceability, etc,” Siam stated. The industry body added that automakers were already subject to obligations under other waste management regimes, including the end-of-life vehicle (ELV) framework, plastic waste management rules, used-oil regulations and e-waste rules.

 

“All this will lead to an increase in base prices of vehicles by 3 to 5 per cent. Four wheeler EVs are still having market penetration under 2.5 per cent and are heavily dependent on government subsidy to manage high costs of EV technology,” it said.

 

A key concern raised by Siam relates to the calculation of EPR obligations and credits. At present, automakers’ obligations are calculated based on individual metals present in batteries, including lithium, nickel, manganese and cobalt, while collection targets are prescribed according to battery weight. EPR credits, however, are generated based on the quantity of materials actually recovered by recyclers.

 

Siam said the system does not sufficiently account for metal losses during battery use and the recycling process. Since obligations are calculated based on the estimated composition of batteries placed in the market while credits depend on actual recovery, the industry body warned of a possible mismatch between demand for and supply of EPR credits.

 

It has proposed that EPR obligations and credits should instead be calculated based on battery weight rather than individual metal composition. Siam has also sought the reinstatement of recovery targets for recyclers, specifying the minimum proportion of battery materials that must be recovered during recycling.

 

They have also flagged EPR credit pricing. Currently, certificate prices are linked to environmental compensation, a penalty imposed on entities that fail to meet obligations. Siam has urged regulators to de-link EPR certificate prices from environmental compensation and instead link them to the viability gap needed to support the recycling ecosystem.

 

The industry body said the existing methodology focuses largely on recyclers’ costs without adequately considering revenues from recovered materials or investments made by producers in collection, transportation, storage, buyback programmes and battery traceability systems.

 

The current rules provide limited incentives for automakers investing in such systems, as they may still have to purchase EPR credits from the market at prevailing prices. This, Siam said, could discourage companies from building collection and take-back infrastructure and encourage them to rely on credit purchases to meet compliance requirements.

 

The submission also raised concerns about battery refurbishers. Siam said many used LFP batteries are likely to be refurbished and repurposed into new products under the refurbisher’s own brand rather than being immediately recycled. In such cases, the industry body argued, producer responsibility should shift from the original manufacturer to the refurbisher, who effectively becomes the producer of a new battery product and should assume the corresponding EPR obligations.

 

As part of its recommendations, Siam has sought separate collection targets for LFP batteries used in electric four-wheelers and proposed aligning battery collection timelines with those under the ELV framework. In the longer term, it suggested moving towards performance-based end-of-life criteria linked to battery health rather than fixed timelines, saying this would better reflect actual battery usage and support India’s e-mobility goals.

 

Bee in the bonnet

 

• Battery recycling targets start after 8 years, but LFP batteries last longer
• Siam suggests using battery health to determine battery lifecycle
• Calculate recycling obligations by battery weight, not metal content
• Link recycling certificate prices to costs, not penalties
• Restore minimum material recovery targets for recyclers