Former Tesla exec indicators new recycling deal as battery prices soar 

Walk through the Redwood Materials recycling facility in Carson City, Nevada with JB Straubel, and one thing stands out: pallets stacked on pallets filled with old batteries, defective battery cells, and waste material from the nearby Panasonic facility.

“The sheer scale of the waste and scrap problem and the number 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 stepping down as technical director in 2019 so that he could focus on growing his recycling business.

Redwood Materials has reached an agreement to recycle scrap and defective battery cells for Envision AESC, which makes batteries for the Nissan Leaf in Smyrna, Tennessee. It is the latest step for the Straubel company, which began in 2017 to supply battery manufacturers and car companies with raw materials that are in short supply due to the increasing global production of electric vehicles.

“We bring the materials back into a very clean and fundamental state so that there is no loss of effectiveness,” said Straubel. “It is not really possible to tell whether cobalt comes from an old battery or from a mine.”

Cobalt, lithium, nickel, and other minerals and metals used in EV batteries have become very hot commodities, so hot that prices have soared to 52-week highs. The price hike is fueled by an announced spike in lithium-ion battery production as automakers from Tesla to General Motors and Ford ramp up EV plans dramatically over the next decade.

“To make the batteries the world needs 10 years from now, the industry will need 1.5 million tons of lithium, 1.5 million tons of graphite, 1 million tons of battery-quality nickel, and 500,000 tons of battery-quality manganese. The world is producing less than Today a third of those materials each. New battery material sources are valued and much needed, “said Sam Jaffe, managing director of Cairn ERA, an energy consultancy.

To make his point clear, Jaffe points out that the demand for US lithium-ion batteries exceeded 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 in the Gigafactory it operates with Tesla in Sparks, Nevada. Thanks to the latest expansion, the Gigafactory will produce almost 2 billion battery cells this year.

Allan Swan, who oversees the part of the Panasonic factory, says more production is needed. “Here in the US we certainly need four, five, six of these factories to support the auto industry,” he said.

Celina Mikolajczak, vice president of engineering and battery technology at Panasonic Energy North America, believes the industry must consider recycling batteries as a new source of vital minerals because of the booming EV plans.

“There is a lot of energy going into extracting these minerals and there is absolutely no point in dumping them,” she said. “We’d be really stupid if we didn’t use the capacity of older cells to create the next generation.”

Straubel and his team in Redwood like to say that the largest lithium mine is in America’s garbage drawers. It’s a reminder that Redwood positions to recycle a wide range of lithium-ion batteries, not just those that go into electric vehicles. Given Straubel’s long tenure at Tesla and his extensive knowledge of the EV market, he is closely monitoring the rapidly growing EV market.

When Straubel tore open the box containing an old laptop battery that had been shipped to Redwood Materials, he appreciated the range of old batteries piled as high as his waist. He estimates that old laptops, cell phones, and long-forgotten cordless tools in the United States may have a billion batteries.

“I’m a little surprised that some of the big OEMs (automakers) may have taken a little longer to turn and orient themselves completely in this direction,” said Straubel. “I’m also a little surprised at how many other successful and growing startups there are.”

Many of these start-ups have become publicly traded companies through SPAC mergers. Straubel thinks some of the startups are fascinating, but some may have weak or questionable business plans. Which? Straubel won’t say it, but he does have these words of caution for investors.

“Just think about the real business plan and long-term potential,” he said.

– CNBC’s Meghan Reeder contributed to this article.

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