Financial Modeling across the Battery Value Chain

Our Experience

Müncon covers the whole battery value chain. Thus, we offer holisitic financial modelling along the value chain.

At the beginning of the value chain, we have experience in calculating and implementing mining projects (more here). Furthermore, Müncon works with its partners on establishing mines and sourcing raw materials. For new batteries, we model lifetime value and optimization of pricing.

Once Electric Vehicles reach their End-of-Life (typically after around 10 years), the batteries are reused in. After another 5-10 years, the batteries are technically unsuitable for futher applications. In this case, these batteries have to be recycled.

With multiple customers, we have modeled the investement costs for entering the market of second life batteries and all related processes: From costs of second life batteries for purchase, transport, to pricing of whole second life battery systems.

Business Model Calculation Tool

Müncon has developed a tool for detailed calculations of all these parameters. The tool thereby dynamically adjusts to the available number of used batteries – depending on capacity and type.

Recycling Cost-Breakdown Tool

For recycling, we also created a tool in order to calculate the overall finances for recycling activities – as the output of such a recycling plant is raw material, the whole operation must be profitable depending on the day-to-day material prices. In turn, the financial model depends on the input of batteries.

Cost-Out Consulting

For existing projects, we consult our clients in optimizing the cost structure of second life projects, optimizing sourcing of first and second life batteries as well as raw materials. At the beginning of the value chain, we help in cost-optimizing mining activities.

Networking

Müncon also supports you in connecting with our existing network in battery 2nd life and battery recycling industry.

Still missing something? We are always adapting, and our team would be glad to help you with any of your concerns.

M" Financial Modeling Insights

Why is it important?

As the ongoing and complex global energy transformation is carried by the switch to a battery economy, the variables influencing finances are constantly in flux. These variables can be found along the value chain.

Moreover, the growing demand for lithium-ion batteries, especially for cars, continuesly leads to an ever upscaling market. For many steps along the value chain, especially second-life and recycling, first, know-how must be built. This makes finance modeling inheretly difficult and a key factor in the succes of battery projects.

Overall, these reasons make it difficult to plan financially and to form pricing strategies. Müncon offers first-hand knowledge and experience in financial modeling and implementing processes especially in Second-Life, Recycling and Mining activities.

What is the battery value chain?

We work towards a future with a circular battery value chain. The picture below illustrates the general idea behind a circular economy: First, raw materials are sourced, before they are manufactured to products. Once these products are used in their primary application, they are then recovered (or recycled). Instead of sourcing new raw materials, existing raw materials are used for creating new products – therefore, it becomes “circular”.

For batteries, different raw materials first must be sourced. Many of those are rare and very expensive to mine – e.g. Nickel, Cobalt or Lithium. In the next step, these materials are refined – meaning that they ar prepared for the use in batteries. Then, the batteries are manufactured and implemented in products: cars, buses , laptops, phones…..

In these applications, the batteries endure their first life. With the end of the first life of the application, many batteries can be re-used – mostly in energy storages with less demand, e.g., industrial energy storage systems.

Finally, the batteries can be recycled. Research suggests, that up to 95% of a Lithium-Ion battery can be recycled. From there, the recycled materials can be used for new batteries. The EU plans to set mandatory levels of recycled content from specific raw materials in EV batteries from 2030 on.

Is there an example why financial modeling of the Battery Value Chain is so complex?

The price for raw materials, especially for key materials like Lithium, Nickel, Cobalt and Manganese is dependent on index prices and the availability of resources. With the ever growing demand and depleting resources (especially for Nickel and Cobalt), these prices are likely to grow on the one hand – however, it is unknown how overvalued these materials are on the financial market and which reservers will be tapped on the next years. In March 2022, Nickel proved how volatile prices are, as one mayor actor in the market found itself in a short squeeze, betting on falling prices while prices exploded.

This is just one example for the first step of the value chain. In the paragraph below, we underline all the steps we can support companies regarding the financial modeling along the battery value chain.

Strategic Topics we cover along the value chain

Inbound Logistics

Procurement Pricing for Sourcing Electric Vehicle Batteries

Cost Optimization Collection & Transport

Battery Testing & BMS Analysis

Operation

Financial Planning Implementation Recycling &Re-Use Site

Financial Modeling Operating Recycling & Re-Use Site

Optimizing of Recycling Costs

Product

Pricing Model for Second Life Energy Storages

Pricing Model for Recycling Material

Life-Cycle Assessment of Cost