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.
This is good stuff.
Redwood is at 95-98% battery mass recovery, and they're shipping the purified raw materials back to battery manufacturers at a profit.
I remember Tesla investors being worried when J.B. Straubel left Tesla in 2019 to work on Redwood full time, but I always knew that Mr. Straubel would never leave the electrification mission. It's his life's work. This is a guy who blew stuff up for fun in high school chemistry, and spent his early years recruiting Stanford students to build a prototype electric car. I think recycling is one of the last pieces of the puzzle towards creating a completely sustainable EV ecosystem.
Bookmark this for the next batch of "why is no one talking about the batteries/mining/lithium/end-of-life" posts.
This message needs to be put out to the general public. Being from the automotive industry it is well known that lead/acid batteries are 100% recyclable. That's why there is a core charge. on almost every battery sold.
Maybe this would encourage recycling of lithium oxide batteries. They have been used for a couple decades in everything from laptops to cordless tools to cars to phones and tablets.
People need a reason to do the right thing and money is the great motivator. Even if it's pennies. Lets face it people prowl residential neighborhoods looking for scrap metals that are almost worthless in small quantities but someone is paying their mortgage with scrap.
EV car batteries get recycled in their entirety into fork lifts and other electric powered machinery where the 30% battery degradation is irrelevant.
Figure 10 years in a car and then 10 years in a fork lift, we won't see the EV batteries needing recycling in qty for twenty years.
Doubt there is a good business plan for recycling EV's at this point in time. Government should be giving out science research grants to universities to work on Lithium battery recycling for when it is needed.