Many of the metals found inside batteries are expensive to procure, with data from the International Energy Agency report suggesting that raw materials make up half the cost of battery production. Finding a way to salvage and reuse these valuable raw materials could thus prove to be both a profitable and environmentally-conscious endeavor.
Each year, more than 84,000 tons worth of batteries end up in landfills across the United States. On average, this means that the country’s 335 million people each generate two pounds of battery waste annually.
While that doesn’t sound like much, it’s equivalent by weight to about 26 9-volt batteries, 39 alkaline AA batteries, or over ten dozen lithium-ion AAA batteries.
Unfortunately, being left to rot in a landfill is the default fate for most batteries in existence. Despite the fact that both alkaline and lithium-ion batteries are recyclable, the American Chemical Society’s weekly Chemical & Engineering News magazine remarks that “less than 5% [of batteries in the United States] are recycled today.”
Other developed countries sport even more dismal records: In the United Kingdom and Australia, just 2% to 3% of spent batteries manage to avoid landfills. China, meanwhile, generates more than 550,000 tons of battery waste per year—more than five times the annual output of the United States, Great Britain, and Australia combined.
The Environmental and Economic Case for Recycling Batteries
This tendency for the lion’s share of batteries to be thrown away rather than recycled has disastrous environmental consequences. For starters, it means that more lithium, manganese, nickel, zinc, and cadmium are being extracted from the Earth’s crust than necessary via water-intensive and poorly regulated processes.
Extracting one ton of lithium from the Salar de Atacama in northern Chile, for example, consumes 450,000 gallons of water. In the nearly-landlocked Democratic Republic of the Congo, cobalt extraction predominantly occurs in “artisanal” mines—small, unregulated operations that sometimes employ young children and pregnant women as miners at rates of just several dollars per day.
Still, many of the metals found inside batteries are expensive to procure, with data from the International Energy Agency report suggesting that raw materials make up half the cost of battery production. Today, lithium costs roughly $15 per pound, while cobalt—an essential ingredient in electric vehicle batteries—costs $31 a pound.
Finding a way to salvage and reuse these valuable raw materials could thus prove to be both a profitable and environmentally-conscious endeavor.
Lots of Batteries and Lots of Changes
The first is that batteries exist in many different formats. From cylindrical batteries for toys and rectangular batteries for phones to battery boxes for cars and battery packs for e-bikes, batteries exist in a multitude of shapes and sizes. And because each type of battery contains slightly different internal components, no one-size-fits-all recycling solution can adequately accommodate all formats currently on the market.
Battery technology also moves quickly, which means that old formats are replaced with new ones every two years. As a result, even if recycling facilities could handle all current battery types, they would have to constantly retool to keep up with the newest designs.
Complex Battery Anatomy
This challenge is compounded by the fact that the anode, cathode, electrolyte, and separator components within a battery must be treated individually if they are to be successfully recycled.
But what are these parts used for, and what are they made of?
Metal ions and electrons (or the “charge”) in a battery flow from the negatively charged anode to the positively charged cathode. Most batteries feature graphite anodes because the material is cheap and conductive; in lithium-ion batteries, the cathode consists of a lithium metal oxide, hence its name.
Battery technology also moves quickly, which means that old formats are replaced with new ones every two years.
A battery’s separator, which sits in between the cathode and anode and prevents them from touching, is typically made from natural materials like cellophane or synthetic ones like nylon or polyethylene.
Finally, the electrolyte solution in a battery facilitates the movement of electrons and metal ions between the cathode and anode. Common electrolyte solutions include liquids, gels, or dry pastes featuring dissolved salts or acids.
Each of a battery’s heterogeneous components needs to be recycled differently. To remove impurities, graphite anodes must be heated to very high temperatures—only then can they be remade into new anodes. Spent lithium cathodes must be similarly heated, pressurized, and annealed into lithium salts via a pyrometallurgical approach or instead leached in acid and precipitated out through a hydrometallurgical process.
Meanwhile, the treatment of battery separators varies. Cellophane separators are biodegradable; synthetic ones are not. The fate of this latter category of separator depends on the cathode recovery process used. While synthetic separators are often burned away during the pyrometallurgical process, they can be recycled via a hydrometallurgical approach.
Redwood Materials: Keeping Lithium-ion Batteries in Circulation
Despite these complexities, one American startup hopes to keep spent lithium-ion batteries out of landfills by remanufacturing them into new electric vehicle batteries.
For former Tesla CTO and now Redwood Materials CEO J.B. Straubel, that end product was no accidental choice. Thanks to the proliferation of electric cars, bikes, and aircraft, he estimates that the world will demand roughly two terawatt-hours of lithium-ion battery capacity, a figure that will outstrip the forecasted supply of 750 gigawatt-hours (GWh) by about 1.25 terawatt-hours (TWh).
To put things into perspective, that output gap is equivalent to the battery capacity of 25 million base Tesla Model 3 sedans, each of which features 50 kilowatt-hour (KWh) batteries.
Responding to this explosion in demand will require suppliers to be creative. After all, producing new batteries by procuring raw materials through the current supply chain causes unacceptable environmental damage and runs counter to the global push towards lower carbon emissions.
A better solution would be to take the old lithium in spent cathodes and the graphite in old anodes and recycle them into new batteries, leaving precious lithium in the ground until it’s needed.
Between March 2022 and March 2023, Redwood Materials did exactly that, recycling 1,268 battery packs totaling roughly half a million pounds in its 74-acre facility in Carson City, Nevada. Redwood then remanufactured these recovered materials into anode and cathode components.
Remarkably, the company claims that its “recycling process is already profitable for smaller batteries, such as those found in consumer devices, and production scrap.” Over the next several years, Redwood aims to lower the cost of recycling a lithium-ion battery to half that of manufacturing a new one—a goal that, if accomplished, will make battery recycling both the environmental and financially obvious choice.
Today, the company can produce up to six GWh—that’s 120,000 Model 3 sedans—worth of battery capacity, a figure it expects to scale to 100 GWh by 2025. This is thanks in part to a $2 billion loan from the U.S. Department of Energy (DOE), which Redwood will use to construct a 600-acre facility in Charleston, South Carolina.
Loans aside, the battery recycling startup has raised almost $2 billion in equity capital from venture capitalists and industry players in the six years since its founding in 2017. In August 2023, the company announced a $1 billion Series D round led by investment management firm T. Rowe Price, venture capital and growth equity firm Capricorn Partners, and Goldman Sachs Asset Management. The startup will use the funds to “expand[] the domestic battery supply chain…[so that] customers [can] purchase [recycled] battery materials made in the US for the first time.”
Powering the Companies That Power Tomorrow
At The Spaventa Group, we’re on a mission to find the world’s most innovative and promising companies.
Our curated series of alternative funds gives you targeted, front-row exposure to the next generation of VC-backed startups. Get in touch with us today!
