Wreckers and recyclers facing uncertain future

Change brings both opportunity and uncertainty, and this is true for the wrecking industry as it charts a future that will – eventually – be hit by an oncoming wave of EVs and hybrids.

U-Pull-It General Manager, Chris Goode, sees the coming years as “probably the greatest period of uncertainty car wreckers have ever faced”.

There is an obvious need for a clear plan to help the industry – worldwide - be part of the electrification transition. At this stage, the questions outweigh the answers.

U-Pull-It stocks around 3000 vehicles at its three self-serve wrecker and recycler sites at Elizabeth, Lonsdale and Gillman. Of that number, there are usually only 10 hybrids and not a single EV. Much of the business’ turnover is generated by the sale of spare parts.

What remains is dismantled and recycled.

U-Pull-It’s reputation as a vehicle recycler is one of the best in the country. Its state-of-theart machinery strips the plastic from valuable copper wiring and separates ferrous and nonferrous bumpers and wheels from unsalvageable vehicles.

But as older petrol cars are retired and more EVs begin to populate Australian roads, Chris envisions the traditional Aussie wreckers gearing their businesses almost entirely towards recycling.

“It will be very interesting to see what the end-of-life business looks like for cars,” he said.

“I can see there will be a lot less part reuse and a lot more recycling and that a yard is not a yard but a workshop recycling centre where you are literally recovering the value of a vehicle in scrap, copper and aluminium.

“It may follow smaller footprint recycling centres rather than allocating a lot of space to dismantling spare parts.”

Trying to plan for the future is a theme repeated across sectors and around the world. John Kett, a former chief executive of IAA, a publicly listed online auction platform for salvaged vehicles worldwide, told The Financial Times: “What the process is going to be, it’s not defined yet. It’s a lot of people trying a lot of different things.”

Major players in the industry are aiming to find the solutions to these issues so they can retain their dominance and reap the rewards. However, it’s not a short-term play. For example, LKQ has operations in North America, Europe and Taiwan. Its commitment to finding the answers to battery recycling spans 10 to 15 years.

Industry and policy makers alike are closely watching countries that were early adopters, such as Norway, to learn from their experience.

And just as incentives are being pushed to encourage EV and low emission purchases at the start of the cycle, there may be a role for subsidies for companies playing a vital role at the end of the cycle.

For Chris, the challenge is that recycling an EV isn’t achieved without overcoming inherent difficulties.

For example, decommissioning a vehicle includes the dangers of working with lithium-ion batteries.

“With the hybrids, we had to send all our staff off to train with the MTA SA so they were safe in undertaking the work they had to do,” said Chris.

“They have a procedure they have to follow strictly because the battery stays live.

“We had to invest in specific equipment for the removal and safe storage of lithium-ion batteries.

“Obviously you have to take the battery out which is one challenge but there are other components that need to be dealt with to manage the vehicle safely.

“Hybrid vehicles like Toyotas have technology incorporated in the braking system that charges the battery.

“It takes our decommissioning team an hour and a half per car.

“With a petrol/diesel vehicle it takes 25 minutes on average to decommission a car.”

At this stage, the extra time needed to decommission the vehicle is not being met with equivalent financial returns or incentives.

The batteries also have special storage requirements and presently have a “very low value”.

“We don’t retail batteries as we have found it too difficult; at this stage we dispose of the batteries through various recycling streams.”

Currently batteries appear to have a an operating life of around 10 years.

“At the time of replacement the cost is unknown, with battery replacement in the vicinity of $20,000. This cost potentially makes the vehicle close to the end of its lifecycle,” said Chris.

“Another concern with hybrids and EVs that are accident damaged is the added cost of safe management and storage whilst awaiting recycling.

“Hybrid vehicles parts currently sell well with their clever engine and braking component technology, however the EV spare part market is in its infancy and has yet to be fully tested.”

Chris said “hybrids do part out really well with all their clever engines and clever braking systems. With EVs, a lot of places are tending to stay away from them because there’s not a huge market for anything specific and the challenges of processing the vehicle are very real.”

Looking again to the overseas experience, UK and US based IMR offers a good example.

As Recycling Today reports: “EMR says recently sold EVs likely will not reach the end of their working lives for at least a decade or more. The window provides an opportunity for the recycling firm to work with the automotive industry now, using product recalls, warranty failures and even the batteries used in e-bikes and e-scooters to provide the volume of material needed to scale up a circular economy for EV batteries.”

“’It took four decades to perfect the processes for recycling an ICE vehicle, but this time we will only have a few years to get it right,” says Helen Waters, head of electric battery recycling at EMR.”

“Waters says its work on EV battery recycling also represents a problemsolving opportunity for the entire auto industry.”

The race to be seen as green even has Chris questioning if EVs themselves will ultimately have a lifespan as short as their batteries.

“I think we’re going to see a technology that’s more adaptable and user friendly than an EV, whether it’s hydrogen or something else.”

Until then, he warns the rise of EVs will begin to impact the number of cars on the road and the number of people who can afford one.