Go with JB Straubel through the Redwood Materials Recycling Plant in Carson City, Nevada, and one thing stands out: pallets stacked on top of pallets filled with old batteries, defective battery cells, and residual material from a nearby Panasonic factory.
“The sheer scale of the waste and scrap problem and the size of the batteries that need to be recycled is, I think, shocking to most people,” said Straubel, founder and CEO of Redwood Materials. Straubel spent more than a decade at Tesla before stepping down as chief technical officer in 2019 so that he could focus on developing his recycling company.
Redwood Materials has reached an agreement to recycle scrap and defective batteries for Envision AESC, which produces batteries for the Nissan LEAF in Smyrna, Tennessee. It is the latest move by the Straubel company started in 2017 to supply battery manufacturers and car companies with small quantities of raw materials as the production of electric vehicles increases worldwide.
“We bring the materials back in a very clean condition and in a fundamental way, so that there is no loss of effectiveness,” Straubel said. “In fact, it doesn’t matter if there is cobalt coming from an old battery or from a mine.”
Cobalt, lithium, nickel and other minerals and metals used in EV batteries have become very hot goods, so hot that prices have risen to a 52-week high. Powering up the price increase is an announced increase in the production of lithium-ion batteries, as carmakers from Tesla to General Motors and Ford dramatically increase EV plans over the next decade.
“To produce the batteries that 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 these materials today. New sources of battery materials are highly valued and needed, “said Sam Jaffe, CEO of Cairn ERA, an energy consulting firm.
To make a point, Jaffe points out that the demand for lithium-ion batteries in the US exceeded 43 megawatt-hours last year and will rise to 482 megawatt-hours by 2030.
The growth is fantastic news for Panasonic, which produces battery cells at Gigafactory, which it operates with Tesla in Sparks, Nevada. Due to its latest expansion, Gigafactory will produce just under 2 billion battery cells this year.
Allan Swan, who runs the factory, says more production is needed. “Here in the United States, we definitely 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 that the growing EV plans mean that the industry must look at battery recycling as a new source of key minerals.
“There is a lot of energy spent on extracting these minerals and it makes absolutely no sense to store them,” she said. “We would be really stupid if we didn’t take advantage of the capacity of older cells to create the next generation.”
Straubel and his Redwood team 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 for those entering electric vehicles. However, given Straubel’s long tenure at Tesla and his extensive knowledge of the EV market, he is closely following the rapidly expanding EV market.
As Straubel opened the packaging of an old laptop battery that had been delivered to Redwood Materials, he enlarged the range of old batteries stacked as high as his waist. He estimates that there may be a billion batteries in old laptops, cell phones and long-forgotten wireless devices around homes in the United States.
“I’m a little surprised that some of the big car manufacturers (car manufacturers) have taken maybe a little longer to be fully pivoted and oriented in that direction,” Straubel said. “I’m also a little surprised at how many other successful and growing start-ups there are.”
Many of these start-ups have become listed companies through SPAC mergers. Straubel thinks some of the startups are interesting, but some may have weak or questionable business plans. Which? Straubel will not say, but he has these words of caution for investors.
“Think calmly about your real business plan and long-term potential,” he said.
CNBC’s Meghan Reeder contributed to this article.