Walk with JB Straubel through the Redwood Materials recycling plant in Carson City, Nevada, and one thing stands out: pallets stacked on pallets full of old batteries, faulty battery cells and scrap material from the nearby Panasonic plant.
“I think the scale of the waste and scrap problem and the scale of batteries that need to be recycled is shocking to most people,” said Straubel, founder and CEO of Redwood Materials. Straubel spent more than a decade at Tesla, before resigning as CTO in 2019 so he could focus on growing his recycling business.
Redwood Materials has entered into an agreement to recycle scrap and faulty battery cells for Envision AESC, which makes batteries for the Nissan LEAF in Smyrna, Tennessee. It is the latest move by the Straubel company that began in 2017 to supply battery manufacturers and auto companies with raw materials that are in short supply as production of electric vehicles increases around the world.
“We return the materials to a very clean and critical state so there is no loss of effectiveness,” said Straubel. “Actually, it is indistinguishable whether the cobalt comes from an old battery or a mine.”
Cobalt, lithium, nickel and other minerals and metals used in electric vehicle batteries have become very hot products – so hot that prices have soared to 52-week highs. Fueling the price spike is an announced surge in lithium-ion battery production as automakers from Tesla to General Motors and Ford dramatically increase EV plans over the next decade.
“To make the batteries the world needs in ten years, the industry will need 1.5 million tons of lithium, 1.5 million tons of graphite, 1 million tons of nickel for batteries and 500,000 tons of manganese for batteries. The world produces less than a third of each of those materials today. New sources of battery materials are highly valued and desperately needed, “said Sam Jaffe, Managing Director of Cairn ERA, an energy consulting firm.
To emphasize his point, Jaffe notes that demand for lithium-ion batteries in the United States surpassed 43 megawatt hours last year and will rise to 482 megawatt hours by 2030.
The growth is fantastic news for Panasonic, which makes battery cells at the Gigafactory it runs with Tesla in Sparks, Nevada. Thanks to its latest expansion, the Gigafactory will produce just under 2 billion battery cells this year.
Allan Swan, who runs the plant, says even more production is needed. “Here in America, we certainly need four, five, six of these factories to support the auto industry,” he said.
Celina Mikolajczak, vice president of battery engineering and technology at Panasonic Energy North America, believes the booming electric vehicle plans mean the industry has to look to battery recycling as a new source of key minerals.
“A lot of energy is spent extracting these minerals and there is no point in dumping them in landfills,” he said. “We’d be really foolish if we didn’t harness the ability of older cells to create the next generation.”
Straubel and his team at Redwood like to say that the largest lithium mine is in America’s garbage cans. It’s a reminder that Redwood is positioning itself to recycle a wide range of lithium-ion batteries, not just those used in electric vehicles. Still, given Straubel’s long tenure at Tesla and his vast knowledge of the electric vehicle market, he’s keeping a close eye on the rapidly expanding EV market.
As Straubel ripped open the package containing an old laptop battery that had been shipped to Redwood Materials, he measured the pallet of old batteries stacked up to his waist. He estimates that there may be a billion batteries in old laptops, cell phones, and cordless tools left in American homes.
“I’m a bit surprised that some of the big OEMs (automakers) took maybe a little longer to pivot and steer completely in this direction,” Straubel said. “I’m also a bit surprised how many other successful and growing startups there are.”
Many of these startups have become publicly traded companies through SPAC mergers. Straubel believes that some of the startups are intriguing, but some may have weak or questionable business plans. Which? Straubel won’t say, but he does have these words of caution for investors.
“Think calmly about the actual business plan and the long-term potential,” he said.
CNBC’s Meghan Reeder contributed to this article.