By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
IndebtaIndebta
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Notification Show More
Aa
IndebtaIndebta
Aa
  • Banking
  • Credit Cards
  • Loans
  • Dept Management
  • Mortgage
  • Markets
  • Investing
  • Small Business
  • Videos
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Follow US
Indebta > News > US auto salvage industry braces for impending bounty of junk EVs
News

US auto salvage industry braces for impending bounty of junk EVs

News Room
Last updated: 2023/10/11 at 12:43 AM
By News Room
Share
8 Min Read
SHARE

The electrification of the auto industry affects more than the workers and companies that build cars. It ripples out to the ones wrenching them apart.

The auto salvage and scrap industries have spent decades processing petrol-powered cars, harvesting pieces from camshafts to hubcaps for resale as spare parts or scrap metal. Now they are contemplating how to process a wave of battery-powered cars when they reach the end of the road. 

Volumes of EVs being recycled are small. Besides the odd Nissan Leaf that turns up, most models have years of life left. EVs comprised just 9.1 per cent of US new car sales in the second quarter of this year.

But as EVs sales grow, they will gradually change flows into salvage yards. About 5 per cent of the 285mn cars on the US roads reach their end of their lives each year. 

Auto salvage is a fragmented industry, with players ranging from family-owned businesses to publicly traded companies valued in the billions. Among the bigger companies are Copart and Insurance Auto Auctions, which auction off junked cars; LKQ, which sells salvaged parts to repair shops and retail customers; and Boyd Group Services, which buys from companies such as LKQ to supply their network of collision repair shops. Together those four companies brought in more than $21bn in revenues last year. 

EVs will require salvage businesses to find new buyers for the battery, the most valuable part of the vehicle, and develop new ways to determine its vigour and safely handle it.

Since the bulk of the value of an EV was contained in the battery, it “leads to potential different market dynamics” in recycling them, said John Kett, a former chief executive of IAA. Auction houses might sell batteries separately from old cars for use in new purposes like powering appliances. 

“It’s going to be a fundamental shift in recycling,” Kett said. “What the process is going to be, it’s not defined yet. It’s a lot of people trying a lot of different things.”

It takes about two decades to turn over every car on US highways, so the question of how to handle batteries is not urgent. Still, executives are thinking about it. This year LKQ signed a memorandum of understanding with Seoul-based smelter Korea Zinc. The plan, said chief executive Dominick Zarcone, was to “work towards a potential large-scale joint venture” to recycle EV batteries.

“This is not a play for 2023 or even 2025 for us,” he said. “This is a 10- to 15-year play . . . The combination of their ability and process technology on the one hand, with our ability to source cores and batteries on the other hand — it could be a great partnership.”

US salvage companies might learn lessons from Norway, where nearly four in five new cars sold last year were electric, the highest share in the world. Tom Grønvold, chief executive at salvage company Grønvolds Bil-Demontering in the Scandinavian country, said the first electric wreck showed up at his yard eight years ago and they now constituted 12 to 15 per cent of his volume. His company advertised to find buyers for batteries that could be converted to power agricultural equipment or boats.

EVs, with fewer moving parts, generally undergo less wear and tear than internal combustion vehicles. But Grønvold said they still generated demand for salvaged parts.

“We were told that these electric engines that they would never break because they would run very easy, but it turns out, especially on the first ones, they break also,” he said.

Companies that already process junked cars were well positioned to play a role in handling batteries, said Jefferies analyst Bret Jordan. Specialist battery recycling specialists such as Redwood Materials and Li-Cycle needed to secure a steady supply, particularly when the main source of EV batteries became old cars rather than duds from battery-makers’ assembly lines.

“At the end of the day, it’s going to be the people who have the ability to collect and distribute and sell those cars,” he said. “They physically have the yard space and the buyer network . . . The guys who are doing the actual grinding down and doing the refining of the component parts aren’t in the business of running 17,000 acres of auction yard like Copart is.”

But EVs require changes in how auto salvage yards operate. Jonathan Morrow, chief executive of M&M Auto Parts in Virginia, said that EVs were physically separated from other cars in the yard to reduce the risk of fire and marked with a sticker to indicate it was not safe to yank parts from them. When it is time for disassembly, technicians use grounded tools to reduce the risk of electrocution.

Morrow, the third generation of his family to run the business, said that relatives had worried in the past that changes to vehicle construction might make cars and trucks harder to repair, dampening the market for salvaged parts. So far their worries have not come to pass.

“Now we’ve come to this EV crossroads,” he said. When the auto industry shifts, “we have about 10 years to truly transition our business models”.

The end of the line for retired vehicles is the scrap metal market. EVs “definitely present a different opportunity”, said Steve Skurnac, interim chief financial officer of metal and electronics recycler Sims Ltd. While many petrol-powered cars were 60 per cent steel, EVs contained more aluminium and copper, which is harder to extract than shredding a car and selling the resulting ferrous scrap to a steel mill, Skurnac said.

“It raises costs if you have to spend more time taking things out rather than chucking it all in a shredder,” Skurnac said. “However, you’re dealing with much higher value materials, so that hopefully is what’s driving the economics.”

Sims’s feedstock would continue to be traditional cars for the better part of the decade, Skurnac said, but “as the tide turns, we will have to understand how we’re going to participate in that end-of-life electric vehicle marketplace”.

Morrow, too, is thinking about the future. Despite the difficulty of change, businesses in auto salvage “are going to see it through. Sticking our nose in the sand like an ostrich is not going to work”.

Read the full article here

News Room October 11, 2023 October 11, 2023
Share this Article
Facebook Twitter Copy Link Print
Leave a comment Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Finance Weekly Newsletter

Join now for the latest news, tips, and analysis about personal finance, credit cards, dept management, and many more from our experts.
Join Now
LVMH’s Loro Piana placed under court administration over worker exploitation

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

Donald Trump threatens 100% secondary tariffs on Russia

Unlock the White House Watch newsletter for freeYour guide to what Trump’s…

Warren Buffett comes out on top from Kraft Heinz flop

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

Ukraine hits back after top agent assassinated in Kyiv

Stay informed with free updatesSimply sign up to the War in Ukraine…

Volodymyr Zelenskyy nominates new Ukraine PM in major reshuffle

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

- Advertisement -
Ad imageAd image

You Might Also Like

News

LVMH’s Loro Piana placed under court administration over worker exploitation

By News Room
News

Donald Trump threatens 100% secondary tariffs on Russia

By News Room
News

Warren Buffett comes out on top from Kraft Heinz flop

By News Room
News

Ukraine hits back after top agent assassinated in Kyiv

By News Room
News

Volodymyr Zelenskyy nominates new Ukraine PM in major reshuffle

By News Room
News

Pensioners versus the new ‘masters of the universe’

By News Room
News

Bitcoin hits $120,000 milestone as US Congress readies for ‘crypto week’

By News Room
News

EU warns Trump’s 30% tariffs would eliminate transatlantic trade

By News Room
Facebook Twitter Pinterest Youtube Instagram
Company
  • Privacy Policy
  • Terms & Conditions
  • Press Release
  • Contact
  • Advertisement
More Info
  • Newsletter
  • Market Data
  • Credit Cards
  • Videos

Sign Up For Free

Subscribe to our newsletter and don't miss out on our programs, webinars and trainings.

I have read and agree to the terms & conditions
Join Community

2023 © Indepta.com. All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?