Can a Tesla founder solve the world’s EV battery supply problem?
When it comes to batteries, recycling is a must. The raw materials that go into batteries come from all over the world, and the long supply chain—mining, refining and transport—is far from green. In fact, the process of obtaining raw materials and transforming them into battery cells is believed to account for the majority of the ecological footprint of manufacturing an electric vehicle. Batteries also represent the largest cost component of an EV, so reducing costs through recycling could be an important factor in bringing EV prices down. The kicker is that supplies of raw materials for battery cells are tight, and could prove to be a major bottleneck over the next few years.
Above: Tesla alum JB Straubel is now working on battery recycling at his new company Redwood Materials (Flickr: International Transport Forum)
Tesla co-founder and former CTO JB Straubel understands this problem well, and he started Redwood Materials in 2017 to do something about it. The company recycles end-of-life batteries, extracts the raw materials and supplies them to battery-makers to be made into new cells.
In a new video, CNBC takes a guided tour through Redwood’s first recycling facility in Carson City, Nevada.
“We don’t have enough materials in the supply chain to build everything today,” Straubel tells CNBC Reporter Phil LeBeau. “A lot more investment has to find its way to the top of the food chain to figure out where these materials will come from, investing in new mines, refining and recycling.”
Demand is projected to outstrip supply as soon as five years from now, and Straubel fears that this could become a major bottleneck. “Recycling and being able to efficiently reuse those materials can relieve some of the burden on the need for new mines.”
Making sure existing batteries get recycled is an obvious step towards relieving the supply crunch. “These are metals that are very durable, and we took a lot of effort to get them out of the ground,” says Celina Mikolajczak, VP of Battery Technology for Panasonic Energy North America. “We would be really foolish if we didn’t take advantage of the capacity of older cells to create the next generation.”
Panasonic produces some two billion cells per year at Tesla’s Nevada Gigafactory. It’s estimated that five or six more facilities of this size would be needed in the US alone to support the levels of EV sales that are expected over the next few years.
Batteries represent the largest cost component of an EV, and materials are the biggest part of the cost of the batteries. “It’s a fairly direct link to say that the way to reduce further the cost of EVs is to figure out how we attack that material cost inside the lithium-ion battery,” says Straubel. “Our goal is to find a way to provide those materials at a lower cost.”
Redwood currently receives about 60 tons (three semi trucks full) of batteries per day—not just from EVs, but from power tools, consumer electronics and other gadgets. The batteries come from various partners, including Panasonic and other battery makers, recycling firms and Amazon.
Above: Former Tesla co-founder, JB Straubel, discusses battery recycling and his new company Redwood Materials (YouTube: CNBC)
“Amazon is an interesting partner, because they have batteries in so many different areas of their business, all the way from data centers to the consumer products like Kindle,” says Straubel. “Some of our partners quickly get overwhelmed by the problem that these old products can create. You can’t just throw them in the landfill. You can’t just shred them—they’ll catch fire. Some partners have reached out to us in a little bit of panic, saying, we need to solve this problem.”
A problem for the consumer electronics industry is an opportunity for Redwood and its customers. “The largest lithium mine could be in the junk drawers of America,” Straubel famously quipped.
After extracting and crushing the used batteries, Redwood uses giant machines to separate the materials. It’s able to recover 80% of a battery’s lithium, and up to 95% of other materials such as cobalt, aluminum, graphite and nickel. At the end of the process, these are packed into barrels, to be shipped to customers and made into new batteries.
Unlike recycling household materials such as paper, glass or plastic, recycling batteries is surprisingly profitable. Straubel explains that, while Redwood is still in a rapid growth phase, investing to build its operations and deploy new equipment, “the unit operations are profitable, so we’re able to take these input materials, refine them, purify them and sell them at a profitable unit margin.”
Recycling is economical compared to mining, even at this early stage, and Straubel says “it’s getting better quite quickly as we improve the technology and scale.”
Redwood isn’t alone in its quest to turn trash into treasure. Another big player in North America is Li-Cycle, which has recycling plants in Ontario and New York. Li-Cycle Executive Chairman Tim Johnston tells CNBC that recycling is more efficient than mining—it uses less energy, less water and less toxic chemicals. “A mining company looking to produce similar materials would struggle to produce the same levels of margin that we can deliver.”
“This absolutely could be more profitable than mining,” Straubel agrees.
The anti-EV crowd is fond of the idea that EV batteries will create an environmental disaster, heedless of the fact that Straubel and many other brilliant entrepreneurs around the world are hard at work on the issue, which promises to be a profit center, not a problem.
“Batteries from EVs will not go in landfills,” Li-Cycle CEO Ajay Kochhar assures us. “There are technologies available like ours that are efficient, profitable, don’t need subsidies, and can do this as a growing, sustainable business.”