The electric vehicle era, barely underway, could soon be stifled by a shortage of batteries and raw materials that will require significant investments in U.S. manufacturing, mining and recycling.
Why it matters: President-elect Joe Biden has made vehicle electrification a core element of his energy and economic policy. But the U.S. is far behind in the global battery race, creating a potential supply chain bottleneck that could slow EV adoption for the next decade.
What’s happening: Tesla’s former battery chief, J.B. Straubel, who has seen the issue developing for years, envisions a long-term solution that would produce EV batteries from recycled lithium, nickel and cobalt salvaged from other cars, not mined from the earth.
- His new startup, Redwood Materials, is developing a closed-loop battery supply chain that he says would lead to cheaper electric vehicles — without harming the environment.
- The U.S. has plenty of lithium, he noted in an interview with Axios, but pulling it from the earth is expensive and difficult — defeating the thesis behind affordable EVs.
- Recycling, he said, “is staring us right in the face as the obvious answer to this,” says Straubel. In a closed-loop system, mines won’t be needed, he says.
The catch: There aren’t enough used EVs hitting the junkyard yet. So for now, Redwood is perfecting its processes using batteries stripped from consumer electronics as well as scrapped battery materials from Panasonic, Tesla’s joint venture partner in its Nevada gigafactory.
- It’s currently taking in 2 GWh worth of used batteries for processing — equivalent to 30,000 cars — and will scale as fast as it can as more EVs hit the end of their life cycle, says Straubel.
How it works: In ovens reaching 2,700°F, Redwood turns the batteries into hot liquid metal and then uses other chemical processes to reduce that metal into highly concentrated forms of lithium, nickel and cobalt.
- In the process, it must remove parts that can’t be recycled while taking care to neutralize hazardous materials.
- Learning how to “un-manufacture” batteries at scale is difficult, Straubel says, but it’s still easier, cheaper and more sustainable than extracting it from the soil.
“It’s the world’s highest quality ore and you don’t have to go digging for it. People have it tucked in their junk drawers.”
— Celina Mikolajczak, vice president of battery technology at Panasonic
Yes, but: Battery recycling is still at least three years away from being a serious business, says Simon Moores, managing director of research firm Benchmark Minerals. Nor does he see it as a silver bullet.
- At best, he projects, recycling will account for 10% of global lithium demand by 2030.
- “It won’t come close to replacing the need for mined material.”
The intrigue: Despite the clear demand for raw materials, financing for new mines is hard to secure because of the long-term investment horizon and potential price volatility, Moores said.
Until more battery factories, mines and recycling operations come online, EV makers will likely face supply chain volatility.
- “No matter how bullish or conservative you are on EVs, the next 10 years are going to be a form of chaos for the industry,” Moores says.
- Just as automakers 100 years ago had to build new supply chains “this whole EV blueprint from the mine to battery cells is being built from scratch.”
The state of play: Right now, the U.S. is almost entirely dependent on Asia for batteries and the raw materials needed to manufacture them.
What to watch: Tesla, GM and others are building enormous new battery factories in the U.S., but America still lags far behind the rest of the world on battery manufacturing capacity.
- Since 2017, China announced plans for at least 107 battery factories, up from nine, with 53 already in production, according to Benchmark.
- The U.S. has just three battery factories, with six more planned, but needs at least 30 by 2030 to meet EV demand, Moores notes.
The bottom line: Mikolajczak of Panasonic just wants to get her hands on more raw materials.
- “Bringing a nickel mine into production is a five- to 10-year endeavor. If I can work with Redwood and in three years’ time have nickel precursor, I’m doing great.”