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Former Tesla CEO signs new recycling deal as battery costs rise

Take a walk 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 scrap from a nearby Panasonic plant.

“The sheer scale of the waste and scrap problem and the size of the batteries that need to be recycled, I think, is shocking to most people,” said Straubel, founder and CEO of Redwood Materials. Straubel spent more than a decade at Tesla before resigning as chief technical officer in 2019 so he could focus on developing his recycling company.

Redwood Materials has reached an agreement to recycle scrap and defective battery cells for Envision AESC, which manufactures batteries for the Nissan LEAF in Smyrna, Tennessee. This is the latest move by Straubel, launched in 201

7, to supply battery manufacturers and car companies with a shortage of raw materials as the production of electric vehicles increases worldwide.

“We return the materials in a very clean and somewhat basic condition, so that there is no loss of efficiency,” said Straubel. “It doesn’t really matter if there’s cobalt coming from an old battery or from a mine.”

Cobalt, lithium, nickel and other minerals and metals used in electricity batteries have become very hot goods, so hot, prices have risen to 52-week highs. Fostering the rise is the announced leap in lithium-ion battery production, as carmakers from Tesla to General Motors and Ford dramatically increase plans for EVs over the next decade.

“To make the batteries 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 and 500,000 tons of manganese from batteries. The world produces more less than a third of each of these materials today. New sources of battery materials are highly valued and desperately needed, “said Sam Jaffe, managing director at Cairn ERA, an energy consulting firm.

To address his opinion at home, Jaffe points out that the consumption of lithium-ion batteries in the United States reached 43 megawatt hours last year and will increase to 482 megawatt hours by 2030.

The growth is fantastic news for Panasonic, which produces battery cells at Gigafactory, which operates Tesla in Sparks, Nevada. Thanks to its latest expansion, Gigafactory will produce just under 2 billion battery cells this year.

Alan Swan, who runs the plant, says more production is needed. “Here in the United States, we certainly need four, five, six of these factories to support the automotive industry,” he said.

Selina Mikolajczak, vice president of engineering and battery technology at Panasonic Energy North America, believes that thriving plans for electric vehicles mean the industry must see battery recycling as a new source of key minerals.

“It takes a lot of energy to extract these minerals, and there’s absolutely no point in dumping them,” she said. “We would be really stupid if we didn’t take advantage of the capacity of the 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 drawers. This is a reminder that Redwood is positioned to recycle a wide range of lithium-ion batteries, not just those that go into electric vehicles. Still, given Straubel’s long tenure at Tesla and his vast knowledge of the electric car market, he is closely monitoring the fast-growing electric car market.

When Straubel tore open a package containing an old laptop battery sent to Redwood Materials, he sized a pallet of old batteries stacked at his waist. He estimates there may be a billion batteries in old laptops, cell phones and long-forgotten cordless tools around American homes.

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

Many of these startups have become publicly traded companies through SPAC mergers. Straubel thinks some startups are intriguing, but some may have weak or questionable business plans. Which ones? Straubel will not say, but there are these words of caution for investors.

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

Megan Reeder of CNBC contributed to this article.

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