There’s no shortage of evidence that the electric vehicle market hit some kind of inflection point in the last year or so. But for Ajay Kochhar, the CEO and co-founder of Li-Cycle, the telling detail was buyer response to General Motors’ very first e-Silverado. The initial production run sold out in 12 minutes on the day it went up for sale in early January – and this is for a pickup that won’t roll off the assembly line until 2024. “Consumers,” as he says, “are speaking.”
And Kochhar is listening. Just four years after launching a small pilot plant in Kingston, Ontario, Li-Cycle has emerged as a formidable player in the nascent EV-battery recycling industry. Now publicly traded (LICY: NYSE), the company quickly raised more than US$500 million from investors. Last year, it secured another US$150 million in strategic infusions from global battery-maker LG Energy Solution, a partner in a newly announced $4.9-billion EV-battery plant in Windsor, Ontario, and Koch Strategic Platforms to build three large facilities in Alabama, Arizona and upstate New York. (While the oil and gas empire run by the Koch family has lobbied heavily against climate action, Koch companies have been investing in a number of renewable sector start-ups of late.)
With early-stage backing from Carnelian Energy Capital, a Houston venture fund, last spring the company also inked a deal with Ultium, the sprawling EV-battery joint venture established by GM and LG Chem, to set up a processing facility within a huge new Ohio battery-plant complex. The value of its planned capital investments is now almost half a billion dollars. As Li-Cycle has told investors, it expects to be recovering battery-grade materials from the equivalent of 60,000 tonnes of lithium-ion batteries annually by 2023.
Investors aren’t the only ones paying attention. In its national blueprint for lithium batteries for 2021 to 2030, the U.S. government puts a heavy strategic emphasis on recycling lithium-ion EV batteries, citing research showing that batteries that use recycled materials can cut costs by 40%, water consumption in the production process by 77% and energy use by 82%.
Not surprisingly, Li-Cycle’s sector is rapidly becoming a very crowded space, attracting China’s battery giant CATL (which currently claims to recycle enough lithium for 200,000 EVs per year), as well as huge investments by multinationals like Nissan, BASF and Tesla, via Redwood Materials, a battery-recycling company founded by a Tesla co-founder. All this activity is being driven in part by the relative scarcity of both lithium and cobalt, another ingredient of lithium-ion batteries, as well as the car industry’s efforts to achieve carbon reduction targets. Meeting those targets pivots on transitioning to electric power but also on contending with the pollution and emissions associated with mountains of used batteries. “It’s a make-or-break moment for the OEMs [original equipment manufacturers],” says Kochhar. “They’re looking at recycling as a way to reach net-zero and have a domestic supply source instead of going to the ends of the earth.”