Automakers and suppliers, keen to fortify an EV supply chain and avoid raw materials shortages, are turning to a domain once overlooked: battery recycling.
Suddenly awash in interest from EV makers and venture firms, the sector has seen a spate of partnerships and funding deals in the past 18 months.
The momentum appears to be building, as investor appetite in battery recycling intensifies, said Alex Smout, principal at InMotion Ventures, Jaguar and Land Rover’s venture capital arm whose portfolio includes Ascend Elements, formerly known as Battery Resourcers.
“The supply side of batteries available for recycling is growing fast, and no one had really anticipated it,” Smout told TechCrunch. “So the ability for these companies to hit scale sooner than had been previously anticipated is really showing itself.”
The opportunity
About 15 million tons of lithium-ion batteries are expected to retire by 2030, the deadline most automakers have set for phasing out gas-engine vehicles, according to AquaMetals. The Nevada-based metals recycler expects the market for battery recycling to top $18.7 billion by the end of the decade.
The blank slate means that nimble startups and long-established players have an opportunity to set the industry’s direction.
Last month, Posh, a startup that automates EV battery recycling, raised $3.8 million in a seed round led by Y Combinator and Metaplanet. Its founders pivoted early this year from building high-end robots for the restaurant industry after they saw recalled Chevrolet Bolt batteries piling up in a warehouse. They instead looked to apply that technology to automate the battery recycling process.
“Right now, battery production is 100% automated, but battery recycling is 100% manual,” co-founder Wesley Zheng told TechCrunch.
Posh is working to change that equation, deploying its robot technology on the assembly line to break down battery packs.
“If you consider the timelines automakers have set for going fully battery-electric, in 2030 or 2035, you can see that this is going to be a huge problem if we don’t spend time doing what no one else is doing,” Zheng said.
Looming demand
Even the founder and CEO of Redwood Materials, one of the battery recycling industry’s dominant players, has said he worries the company is too late to meet demand.
J.B. Straubel, who is perhaps better known as the Tesla co-founder and former CTO, has raised $775 million from Amazon, Panasonic, Ford, T. Rowe Price and others in a bid to become one of the world’s largest battery recyclers. In June, Redwood announced a partnership with Toyota to collect, refurbish and recycle batteries and battery materials to send to the automaker’s upcoming North Carolina battery plant. The company also has partnerships with Ford and Volvo.
“If you look at the volumes of EVs we need to have on the roads five or 10 years from now, I feel like we’re too late in starting to build the infrastructure at scale to do this,” Straubel said at the Financial Times’ Future of the Car conference in May.
Many automakers hoping to avoid the same supply chain headaches experienced during the COVID-19 pandemic are pushing to become more vertically integrated and bring as much of the battery lifecycle in house.
For instance, Volkswagen Group formed a new company, PowerCo, to manage its global battery business, from raw materials to recycling. The automaker broke ground Thursday on the first of six battery factories it plans to build in Europe.
That drive toward vertical integration is prompting automakers to invest in startups along the entire lifecycle, from battery cell technology to recycling. In the last five years alone, $42 billion in venture capital and growth equity have been invested in the sector, according to a TechCrunch and PitchBook analysis. VW has backed solid-state battery company QuantumScape, BMW has invested in Our Next Energy and GM has put money into fast-charging battery startup Soelect as well as SolidEnergy Systems.
A growing pool
While much of the attention (and investment) has been directed at battery technology startups, recycling companies are starting to gain ground — meaning partnerships and investment — as well. Redwood Materials is perhaps the most visible and buzzy in the sector. However, there are many more companies out there in the world, from publicly traded enterprises like American Battery Technology Company, AquaMetals and Li-Cycle to startups like Ascend Elements and established companies such as Accurec Recycling and Retriev Technologies.
Most of the deals involving battery recycling fall into the partnership and investment category. However, there has been at least one acquisition within the industry. Last year, Cox Automotive acquired Spiers, a company that works with automakers to repair, replace or recycle EV batteries.
States, too, are vying for a slice of the burgeoning industry. Georgia has been particularly aggressive, engineering blockbuster recruitment deals and tax incentives to recruit the businesses needed to develop a closed-loop battery-electric ecosystem.
The state awarded Rivian its largest-ever $1.5 billion incentives package to build an EV factory near Atlanta.
Meanwhile, Hyundai’s planned $6.5 billion EV factory outside of Savannah represents the largest economic development deal recruited by the Peach State. It will be located near the $2.6 billion EV battery complex that South Korean EV lithium-ion battery maker SK On plans to open soon.
Georgia’s efforts appear to be working. Ascend Elements plans to open in August a $43 million battery recycling plant near SK On to handle lithium, cobalt and nickel.
Source: https://finance.yahoo.com/news/battery-recycling-could-next-investor-184138630.html