You are looking at bags and bags of depleted lithium-ion batteries.
Batteries from electric cars, phones, scooters, laptops, tablets, cameras, you name it.
They are flammable and toxic so they can't end up in landfills.
And believe it or not, these old batteries are still filled with materials that are as good as new.
Batteries are amazing that way because the metals in the critical materials inside of them are very highly recyclable.
We recover ninety five, ninety eight percent of many of those critical materials like nickel and cobalt and copper.
Essentially all of those metals are able to go back straight into reuse again and again.
This is JB Straubel, he is a co-founder and longtime chief technology officer of Tesla.
He was the mastermind behind many of Tesla's core technologies, particularly around the battery tech.
He left Tesla in 2019 so he could focus on recycling all of these batteries.
He gave CNBC an inside look at his start-up, Redwood Materials, where he's already recycling tons of batteries and sending some of the recovered
materials to Panasonic so the battery maker can put them right back into Tesla's cars.
We can't just take all these really great minerals and just dump them.
That would be criminal. I mean, we have to reuse them.
Straubel started thinking about this massive and growing problem long before he left Tesla.
We started this, you know, because I saw this this looming problem from the end of life vehicles that we were creating and starting to have a deep
appreciation back then for the scale of what was coming and the fact that, you know, I didn't see anyone else getting ready for the scale of that
problem. The sheer magnitude of the the waste and scrap problem and the magnitude of batteries that need to get recycled is, I think, shocking to
most people. There's, I think, a really exciting opportunity to link the recycling and solving the end of life problem with the supply chain
solution, bringing more materials back into the feedstock so it doesn't bottleneck battery production.
Batteries are indeed everywhere these days, and the demand for lithium-ion batteries has risen sharply in the past five years and is expected to grow
from 44.2 billion dollars in 2020 to 94.4 billion by 2025, mostly due to electric cars.
EVs are expected to hit 10 percent of global passenger vehicle sales by 2025, rising to 58 percent of sales by 2040.
Do we have enough materials to build all the EV batteries that are going to be required?
Frankly, no, not right this second.
We don't have enough materials in the supply chain to build everything today.
So growth has to happen in the supply chain for all these vehicles.
A lot more of that 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.
We look at the materials that are in cells.
These are metals that are very durable.
And we took a lot of effort to get them out of the ground.
It's not like we have excess supply lying around that we can just pull to make cells from.
Our excess supply is in the cells that are basically come to end of life and are ready for recycling.
So we would be really foolish if we didn't take advantage of the capacity of older cells to create the next generation.
Panasonic says it produces two billion battery cells a year out of Tesla's Gigafactory in Nevada.
A specifically Model 3, Model Y for the Tesla team.
So it's only those two models in America that we support in this factory that we need somewhere between 20 to 25 of these all over the world.
But particularly here in the United States, we certainly need at least four or five or six of these factories to support the wider automotive
industry.
Batteries are made up of a mix of metals and minerals, including nickel, cobalt, lithium, graphite and copper that come from all over the world.
Battery cells mined from raw materials often travel more than 20,000 nautical miles from mine to automaker, a supply chain that is far from
sustainable.
Recycling has a very big role to play in the sustainability of electric vehicles themselves.
One of the biggest sources of CO2 from an electric vehicle is from the mining and manufacturing side of battery packs.
Mining for lithium is not a very CO2 friendly activity, so there will be a time where a recycling of batteries for the metals that
it needs is going to be a strong factor in helping EVs achieve carbon neutrality.
The materials inl EV battery cells, for example, could have been mined in South America, Africa, Indonesia and Australia.
Then they are often sent to China for refining and then in Tesla's case, sent to the U.S.
for cell production at Panasonic in Nevada at the Gigafactory.
And a significant shortage of battery materials is looming in the near term for materials like lithium, nickel, cobalt and copper.
Right now, demand is outstripping supply five years down the road, correct?
That's correct.
How worried are you about it?
Well, I am pretty worried that this could become a bottleneck to electrifying everything that people are hoping to do.
I think it's going to be a bit painful when all of these factories try and ramp at the same time and recycling and being able to efficiently reuse
those materials can relieve some of the burden on the need for new mines or finding new resources.
The clunky supply chain also adds cost to the batteries, which are the most expensive part of an electric car.
The cost of the electric vehicle is dropping, but it's still dominated by the cost of the battery.
And within the battery, the biggest cost are the materials.
It's a fairly direct link to say that the way to reduce further the cost of EVs so that more and more people can afford them is to figure out how we
attack that material cost inside the lithium-ion battery.
And as the demand for electric cars continues to grow, it's going to put more stress on those commodity markets.
But our goal is to to find a way to decouple that and provide those materials for use at a lower cost.
Redwood Materials is in the process of expanding and building new machinery to ramp capacity.
Kevin Kassekert, another former Tesla employee, is helping oversee that effort.
The first challenge the company faces is gathering all of the batteries.
I like to think of the company and kind of three major groups.
One is really collecting and receiving, right.
Which is what you see here.
And there's very safe ways that we do that.
The other is more refining.
So breaking the material down, taking it from its product that you see into its base metals.
Right. Which are fully recoverable and then building those back into battery grade products so we can sell back into the industry.
We currently receive about 60 tons a day.
So it's about three semi trucks a day.
And that's continued to increase as we as we grow the business.
We'll go through this within a couple of months.
Redwood recycles a wide range of lithium-ion batteries, not just those that go into EVs.
It gathers the materials through a series of partnerships with companies like Panasonic, e-waste recycling giant ERI, and Envision AESC, which
manufactures batteries for the Nissan Leaf.
It also teamed up with Amazon.
Amazon is an interesting partner because they have batteries in so many different areas of their business, all the way from data centers with AWS
to the consumer products with things like Kindle.
We're discussing with them a number of different projects, but the reach and access into the consumer world could offer some really interesting
opportunities. It's been interesting how some of our partners get get quickly kind of overwhelmed by the problem that these old products can
create. When these things pile up, they get to be really difficult to deal with.
And 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, gee, you know, we need to solve this problem.
You know, can you help?
But beyond its partners, Straubel said the largest lithium mine could be in the junk drawers of America.
There's only so many geologic sources of a lot of these key materials.
And for decades we've been digging it up and putting it in products and using it in so many of these consumer products are just getting locked
away, stored in people's drawers, literally at home or in their garage or in a shoebox.
And over time, that collection of old consumer products stored up in people's proverbial drawer at home has become,
I think, the world's largest resource of these materials.
What do you think most people think?
Do they think I don't want to throw it in a landfill, but I don't know what to do with it?
I do think there's a lot of confusion.
There is concern about data.
There's concern about just throwing it in the garbage.
But there's a lot of barriers to productively recycling it.
And the hurdle is so high right now that it encourages people to just do nothing to hang onto it.
But it is wasting an incredibly valuable opportunity and a resource that we can tap into.
Consumers can help by dropping off their old electronics at places like Best Buy, Staples, Salvation Army or at their local solid waste authority.
Recyclers will pick them up and destroy the data before refurbishing them or extracting materials.
Once Redwood receives the batteries, they are broken down and processed in massive machines.
This is one of the machines that is used to separate the different metals away from the batteries, which lets us very efficiently separate.
nickel and cobalt away from things like lithium.
The final product goes into these bins of raw materials, which will ship to manufacturers.
Redwoods techniques recover more than 95 percent of the battery's nickel, cobalt, aluminum, graphite and more than 80 percent of the battery's
lithium.
This is one of our finished nickel products.
So this is a mixed nickel sulfate product.
And you can see packaged and ready to go basically back into battery cathode, manufacturing.
This would be the type of product that you would ship back to Panasonic or to some other battery manufacturer.
They can now use this.
Exactly.
The lithium-ion battery recycling market is projected to grow to 18.1 billion dollars in 2030, up from 1.5 billion in
2019. Recycling batteries isn't just good for the planet.
It's also surprisingly good business.
We make margin and in a few different places there, and it's really by solving the transport and disposal problems with the batteries
initially. And we also take in a lot of consumer batteries, you know, things that used to be, you know, in an individual's care, whether it was a
scooter or a bicycle or a phone.
These things are a bit difficult to handle and they do have chemical risks and fire risks.
So we solve that problem.
You charge customers to solve that problem
Well, or or we are able to basically do that at a low, low return fee.
So in some cases, we're actually paying customers back for the batteries, depending on how much material we're able to recover and resell from it.
And that's my other question.
Are you making money reselling materials yet or is it still in the start-up phase where you're not turning a profit?
Well, we're still we're still growing very quickly.
So we're consuming capital as we build the operation and the equipment.
The most important thing, though, is 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.
And that that's the fundamentally key thing, is it's getting better quite quickly as we improve the technology and scale.
That gives me the encouragement that this is economic today relative to mining.
Even at this early stage,
There's been just an amazing blossoming of recycling companies globally.
China leads here again, U.S.
is catching up, as is Europe.
But recycling is a very sort of unsexy industry that could be very profitable in the future because, of course, we need to take those
batteries recharge them, recondition them and use them again.
That's the good news. And there are many companies at work right now to fill that demand.
Another big player in North America is Li-Cycle, which has battery recycling plants operating in Ontario, Canada, and Rochester, New York, and
has plans for rapid expansion.
So this is our facility in Rochester, New York.
It's part of the Kodak Eastman business park.
So one of the things we like to say about this facility is not only do we recycle batteries, but we also recycle a building.
Li-Cycle says that recycling is more efficient than mining.
Long term, recycling is more efficient.
It uses less energy and uses less water and uses less reagents than traditional mining processes.
So our cost base will always be lower.
The benefit for Li-Cycle is that we don't set the price.
The mining industry sets the price.
In fact, it's the marginal operator in that industry which sets the price.
And what we do is we benefit from those higher prices.
Now, long term, we can see a potential where recycling starts to impact and bring down the cost of these materials.
But at the moment, we're a relatively small part of the overall ecosystem.
We're really unlocking the value in the batteries and we're selling those materials at market dictated prices, which is dictated by
mining and refining.
Today, primarily, we're not relying on getting paid by anybody for a waste fee.
And frankly, customers don't like that.
They want to know that we're going to be unlocking the value.
A mining company of equivalent looking to produce similar materials, they would struggle to produce the same levels of margin that we can
deliver as a recycling company.
So not only is there a good ESG sentiment and story behind what Li-Cycle is doing, but from a business perspective, it's highly profitable.
This absolutely could be more profitable than mining.
You know, mining has the fluctuation and total dependency on the raw material cost, which makes it really different kind of industry.
We're more focused on the manufacturing and the conversion cost, but our business moves up and down with the commodity price where as a mine is
totally linked to that.
Recycling of batteries will be a absolutely crucial component to this whole 21st century supply chain.
You've got a couple of problems and challenges to attack here.
One is to get rid of the volume of end-of-life batteries that are going to be coming from EVs and that's really going to take off 2025 onwards.
The second thing is, what metals can you get out of those batteries and and what can you turn them into and what industries can use them again?
And that's a secondary problem.
And so you've got a lot of pioneers right now looking at recycling.
It's going to be a big industry.
Straubel says the plan is to continue to improve recycling technology and to create an entirely closed loop system so recycling can actually surpass
geological mining.
We are actively setting up facilities and looking for locations in Europe, perhaps Norway, perhaps Germany, and also some smaller
facilities on the other corners of the U.S., perhaps Texas, perhaps somewhere in the Midwest.
In five to seven years from now, we need to be able to break down materials in the EV space at the pace that they're being manufactured today.
So if there's, you know, let's just say for rough math, there's a thousand cars a day being produced and there's more than that.
We need to be able to recover and recycle at that same rate when those products hit their end of life.
And that's just in the EV space.
Almost everything has a battery in it nowadays.
And so a lot of that technology is lithium-ion cells and it all has value that needs to be recovered and sent back into the supply chain.
And could recycling actually replace mining one day?
With recycling of batteries you'll never get enough lithium out of those batteries and in the right quality to use back in batteries.
That's like a fundamental issue for the industry.
That won't be changing, especially with the demand profiling ever increasing as well.
But the fact of the matter is, at today's date, it is cheaper to mine for lithium rather than recycle it from existing battery packs.
So that is projected to go on for the next at least 10 years or so.
But still, it will be a very important part of making EV and battery production more environmentally friendly.
Batteries from EVs will not go in landfills.
There are technologies available like ours, like Li-Cycle's that are efficient, profitable, don't need subsidies and can do this as a
sustainable, growing business.
When I think about the maybe distant future, when we're operating as a really sustainable society and economy, we need to be
productively unbuilding everything that we've built.
This is kind of the tip of the proverbial iceberg.
We're currently recycling several gigawatt hours of energy storage per year.
That seems like a big amount, but it's only maybe one or two percent of what's actually being built today.
So if you look ahead, we need to be operating at 100 times the scale we are now in just a few short years.
This has to get solved.
There really is no alternative.
We can't just sort of dump these batteries into the ocean or into a landfill.
Know, it just it just doesn't work.
So I really enjoy working on slightly underdog problems that are not getting enough attention where, you know, with a small team, we can affect
a big industry in the future and we can invent some things that are going to have a dramatic impact on a huge portion of the industry.