E-BIKE BATTERY STEWARDSHIP AND RECYCLING

By Steve Bina

Extended Producer Responsibility (EPR). Do you know what that is or what it means? If you don’t know what EPR is or how it might impact you and your business, you will. And it’s not good.

The advent and continued growth of e-bikes mean there is a growing population of lithium-ion batteries. Like all batteries, these will eventually wear out and need to be replaced. I’ve been told by someone who should know that a lithium-ion battery is considered at end-of-life and in need of replacement when it won’t charge beyond 70 percent capacity. 

Additionally, with the ever-increasing number of e-bikes being sold and in use, the probability of damage to the lithium-ion batteries also increases, such as physical damage due to dropping the bike or a collision with a stationary object. There could be water damage if left out in the rain or caught in a flooding situation, or thermal damage if the battery is overcharged, if an incompatible charger is used, or the battery is used to power an e-bike that has been modified to attain more power to the motor(s) to achieve greater speed.  

What happens to the batteries that get replaced?

This reality has gotten the attention of certain industry groups, along with recycling groups, Battery Network, formerly Call2Recycle, among others. This is a good start. However, all of the current recycling efforts are voluntary. To make recycling more prevalent, laws are beginning to make their way into the conversation in certain jurisdictions. 

One of the most notable is Illinois Senate Bill 3686, known as the Portable Battery Stewardship Act (PBSA), which became law on August 9, 2024. Below is a link to the complete act. (https://www.ilga.gov/documents/legislation/103/SB/10300SB3686enr.htm)

The act states, “Beginning July 1, 2026, a retailer may not sell, offer for sale, distribute, or otherwise make available for sale a covered battery or battery-containing product containing one or more covered batteries unless the producer of the covered battery or battery-containing product is identified as a participant in a battery stewardship organization whose plan has been approved by the Agency.” Not only can you not sell a product with a lithium-ion battery in Illinois unless the battery or product participates in a stewardship program, but it has to be an approved program. 

Retailers of covered batteries or battery-containing products are not required to make their retail locations available as collection sites for a stewardship program. However, those that do serve as collection sites must comply with all requirements for a collection site as stated in the act. 

Retailers may not sell, offer to sell, distribute, or otherwise make available for sale covered batteries unless they are marked consistent with the requirements of the act.   

The act goes into great detail to define maker, producer, distributor, and retailer relative to who ultimately has the responsibility of conforming to the requirements of the act.  

It will be interesting to see what happens to e-bike sales in Illinois come the first of July. 

At first glance, this type of legislation is not a completely bad thing. Left unregulated, the majority of depleted or damaged lithium-ion batteries would get tossed into the garbage and end up in landfills. Like any mandatory requirement, there is a cost associated with compliance. Written into the PBSA, the battery stewardship organization must provide the retailer with available end-of-life management options and include in-store signage, written materials, and any other promotional materials detailing end-of-life options. PBSA prohibits charging a point-of-sale fee to consumers to cover the administrative or operational costs of the stewardship program. 

PBSA further mandates that any stewardship program on behalf of the battery producers must create and administer a way to collect charges from those participating producers to offset the cost of the plan.

Since a point-of-sale consumer fee is prohibited and the stewardship program must collect from the battery producers to offset the costs of the plan, an ongoing issue of revenue generation/collection arises. What has been happening is that brands are pushing the costs downstream to retailers in an attempt to maintain their margins and operating profits, further degrading retailer margins.

Whenever new regulations are put in place relative to consumer products, ultimately the cost is borne by the consumer. When the federal government began mandating certain required automobile safety features, such as windshield wipers, seat belts, air bags, or rear-view cameras, those costs were added to the cost of the vehicle. Those costs were not passed down to the dealers as option costs; they were built into the overall dealer cost of the car. Because those safety features were built into every car, the volumes involved helped mitigate the individual feature cost. 

Using the auto industry as an example, the costs associated with a stewardship program could be added to the producer’s/distributor’s product selling price. That would allow recovery of those costs and not be in violation of the Illinois statute. The bicycle industry should be able and willing to incorporate stewardship and recycling expenses into their product pricing. 

Suppliers, manufacturers, and other industry stakeholders need to revisit the current stewardship fee practices and collaborate with the retail channel. Bicycle retailer margins are already thin and under pressure due to market conditions. Further deterioration because of the battery fees is not in the best interest of the bicycle industry and certainly not bicycle retailers. 

There are some who believe such action by producers/distributors would be considered collusion and hence illegal. I’m not one of them. It would take just one or two providers adding the stewardship costs to their selling price to start an industry trend. Those that resist will find themselves at a competitive disadvantage and likely face dealers dropping their e-bike product in favor of those that have made the change.

Given the scope of this Illinois law, it’s likely to become a template for other jurisdictions considering legislation on battery stewardship and recycling. As this becomes an issue in more places, it’s time to make sure generating the revenue to support these programs is fair at every level.  

Now you know about Extended Producer Responsibility and how it will likely impact your business. 

Contact Steve Bina: steve@humanpoweredsolutions.com