Circular Business Models for Electric Vehicle Lithium-Ion Batteries: An analysis of current practices of vehicle manufacturers in the EU and the potential for innovation at Volvo Group

Abstract: With the transition towards an electrified vehicle fleet, lithium-ion batteries (LIBs) have come into focus for different stakeholders due to their high costs, resource, and energy demands for production as well as connected environmental concerns and supply risks. Circular economy (CE) strategies to slow and close resource loops and circular business models (CBMs) are discussed as solutions to these issues. This research uses a combined multiple and single case study approach to explore how a vehicle manufacturer could innovate its business model to incorporate an environmentally responsible life cycle management of LIBs. An ideal CE strategy for LIBs is identified by reviewing existing environmental assessments. Current CE strategies amongst vehicle manufacturers, their operationalisation and underlying influencing factors are identified by analysing companies’ websites and interviews with representatives from six different companies. Finally, the potential for CBM innovation and implementation at Volvo Group is explored through interviews with eight employees that are involved in the LIB life cycle. The results demonstrate that an ideal CE strategy for LIBs follows the EU’s waste hierarchy as translated into the technical cycle of the CE. It was found that vehicle manufacturers focus most on repair, refurbishing, and repurposing to slow the loop while remanufacturing is rarely deployed. Most repurposing projects are still in their piloting phase and only a few closed-loop recycling initiatives involving vehicle manufacturers were found. While the CE strategies are very similar, the specific CBM designs vary especially with regards to the involvement of vehicle manufacturers indicating they are context-specific and depend on internal factors. All CBMs were found to require close collaboration between different stakeholders to build trust and reduce uncertainties. Furthermore, the necessity to design for disassembly and to build expertise to thoroughly diagnose the state of health of LIBs to enable strategies that slow the loop was highlighted.