Shannon Flynn
As electric vehicles (EVs) have grown increasingly popular, so has the push to improve their supply chains. The latest movement in this trend comes as the Department of Energy (DOE) grants a $375 million loan to Li-Cycle, a lithium battery recycling company.
The loan will help Li-Cycle build a recycling facility near Rochester, New York, the company’s fifth in North America. Once operational, the plant will recycle more than 200,000 EVs’ worth of lithium-ion batteries annually. It represents a significant step forward in the overall sustainability of electric vehicles, which has come into question with increasing attention over lithium mining.
Rising lithium battery initiatives
This massive investment from the DOE is far from its first or largest in lithium battery recycling. In February 2023, the DOE announced a $2 billion loan for Redwood Materials to build a recycling facility near Reno, Nevada. A week before the Li-Cycle announcement, recycling firm Ecobat announced plans to build its first battery recycling plant in Arizona.
Even outside of recycling, U.S. lithium battery production is ramping up. In January 2023, the DOE awarded a $700 million loan to build an on-site processing facility at the Rhyolite Ridge lithium deposit. Lithium company Ioneer claims the site will produce enough lithium to build 400,000 EVs annually.
The American Battery Technology Company — another key player in lithium production and recycling — also announced the discovery of one of the largest lithium deposits in the U.S. in late February. With an estimated 15.8 million tons of lithium carbonate equivalent, the mine could further sustain the surge in domestic lithium-ion battery production.
The need for lithium battery recycling
These rising investments in lithium batteries come as the nation faces unprecedented demand for EV production. The U.S. aims for half of all domestically manufactured vehicles sold to be electric by 2030. However, this increasing demand has spurred a rise in lithium battery costs after more than a decade of falling prices.
Lithium supplies must increase if the U.S. hopes to meet its 2030 goal. Domestic sources are particularly important as the nation also aims to reshore much of the manufacturing industry and avoid supply chain dependencies on distant international mines.
Lithium battery recycling plays a particularly crucial role in this shift. Despite discovering deposits, the world’s lithium supply is fairly limited, especially in comparison to EV demand. The World Economic Forum predicts the world could face lithium shortages as early as 2025, with global reserves having enough material to produce just 2.5 billion batteries with current technology.
Recycling plants like the upcoming Li-Cycle facility could offset those limits and help make EV production more sustainable. Lithium mining has come under increasing scrutiny for its extensive water consumption and toxic chemicals that can leak into the surrounding environment. Recycling lithium instead of using new materials would also decrease EV manufacturing’s overall carbon footprint.
Remaining headwinds
Some challenges remain despite lithium recycling’s potential and the nation’s rising investment in it. Most notably, lithium-ion batteries are dangerous and expensive to recycle. These batteries caused 245 fires across 64 waste facilities between 2013 and 2020, so recycling plants must transport and handle them carefully. That extra care comes at a high cost.
Because manufacturers don’t build lithium-ion batteries with recycling in mind, they’re often difficult to disassemble, too. Facilities must often crush them and sort through the materials, making lead times long and production costs high.
These expenses and complications could make recycled batteries a less-popular alternative to more environmentally destructive virgin lithium. That could slow these crucial facilities’ growth, hindering the sustainability and economic viability of EVs as a whole.
There’s also the risk that lithium battery recycling won’t reach economies of scale for a decade or more, and companies expanding their capacity could run out of funding.
Emerging solutions
These challenges are concerning, but some promising signs are on the horizon. As investment in lithium battery recycling keeps growing, more manufacturers may design these components to be easier to recycle. Supply chain technologies like Internet of Things tracking will also help protect them in transit to minimize hazards.
New production technologies also make battery recycling a more cost-effective solution. Researchers developed a new recycling method in 2022 that produces batteries that last longer and charge faster than those containing entirely new materials. This breakthrough could lower recycled batteries’ lifetime costs, encouraging a faster shift away from mining dependence.
Other manufacturers have focused on making lithium-ion batteries with fewer materials. An MIT-designed battery lowers costs by 40% by using a semi-solid electrode to require less metal. On top of lowering end prices, this approach will also make it easier for recycling plants to meet rising production demands.
EV manufacturing has a bright future
Domestic EV manufacturing is on the verge of considerable growth amid rising demand and government reshoring initiatives. New battery recycling and production facilities from Li-Cycle and similar companies will sustain that growth.
As EV manufacturing embraces these technologies, these vehicles can grow while minimizing their environmental impact. That shift will ensure a cleaner future for businesses and consumers alike.
