Especially in highly developed regions like the United States and Europe, the global drive to decarbonize depends heavily on lithium-ion (Li-ion) batteries to power electric vehicles (EVs) and store renewable energy – and those batteries depend on lithium. In fact, the need for Li-ion batteries is so great that the International Energy Agency (IEA) projects demand for lithium will increase 600% by 2040.
By 2040, worldwide lithium demand will reach a total of 1.4 million tons annually in a net zero scenario, IEA estimates. Energy storage and batteries for electronic devices will push this demand even higher. All of the world’s current mines combined can’t meet that level of demand.
So where will the rest of this critical material come from? Can we rethink the way we design, deliver and consume lithium to make the world’s net zero goals achievable?
Automakers and regulators are counting on recycling – a capability critical to a circular economy – to reclaim lithium and other critical materials from used EV batteries. The good news? The race to ramp up lithium recovery and recycling in time to meet demand is heating up.
The torturous lithium supply chain
Although the transition to EVs has barely begun, the US already sources most of its lithium from South America, while Europe buys primarily from Chile and China. Regardless of where it is mined, however, most lithium is then shipped to China, which controls 70% of EV battery production, where it is processed and used to manufacture batteries. The batteries are then shipped to EV manufacturers in the US and Europe.
Redwood Materials, a US-based battery recycling company started by Tesla co-founder JB Straubel, calculates that all that shipping adds up to an unnecessary, expensive and carbon-intensive trip of 50,000 miles or more, and not just for lithium, but also for other critical materials, including cobalt and nickel. It’s a risk-packed supply chain that could be interrupted by wars, pandemics, trade disputes and port strikes, to name just a few factors.
To eliminate those risks, both the US and EU are working to develop complete lithium-ion supply chains within their borders. This includes building gigafactories that can process critical materials, including lithium, and then use it to manufacture batteries. In addition to the current lithium mining activities in these regions, both regions also are developing their own lithium mines, but most won’t begin production for years.
Recycling lithium: a key and complementary solution
Which begs the question: What if a supply chain disruption happens tomorrow?
Regulators’ answer: Recover the critical materials – including lithium, cobalt, nickel and copper – from used EV batteries by recycling them.
Redwood Materials is among a handful of advanced recyclers focused on helping Li-ion users in North America and Europe meet new EU regulations intended to create a more rational and reliable supply chain via recycling. Redwood estimates that its process recovers 95% of the critical materials in a lithium-ion battery, including those from EVs, mobile phones and other electronic devices.
“Today, 50% of the raw materials used to make a battery MAY get extracted in the recycling process,” said Reza Sadeghi, chief strategy officer for BIOVIA, a Dassault Systemes brand that provides a scientific collaborative environment for advanced biological, chemical and materials experiences. “We want to get to 90%-plus, and we have the science to do it. BIOVIA helps both battery manufacturers and companies that supply battery manufacturers with materials to make their batteries sustainable, meet the necessary performance criteria and make them at the right cost.”
“End-of-life batteries contain many valuable resources, and we must be able to reuse those critical raw materials instead of relying on third countries for supply,” Spain’s minister for the ecological transition, Teresa Ribera, said in announcing a new EU program to create a sustainable, circular battery supply chain for Europe.
EU regulations currently being phased into effect require battery manufacturers to create a circular lithium lifecycle by using a percentage of recycled lithium in new batteries. That percentage increases each year. With Reuters reporting that, notwithstanding boom and bust cycles, lithium hydroxide sold for US $11,930 per metric ton and lithium carbonate sold for $12,850 per metric ton in July 2024, the material is both too rare and too valuable to waste. Recycling is central to recovering and reusing it.
In 2022, Redwood Materials had the capacity to recycle the batteries from 60,000 EVs per year at its Nevada plant, and it is building a second plant near BMW’s automotive manufacturing plant in South Carolina. Its long-term goal is to establish recycling facilities convenient to or co-located with most European and North American EV manufacturing plants, as announced in a series of press releases since 2021.
In 2023, the company also purchased EU battery recycler Redux Recycling GmbH in Bremerhaven, Germany. Both Redux and Redwood have developed recycling processes that recover approximately 95% of the lithium and other critical materials present in a battery.
Electric car manufacturers that sell into the EU are legally responsible for recycling used batteries from the EVs they produce, and once a manufacturer has to recycle for Europe they may as well recycle everywhere. Which may explain why automotive OEMs are lining up to partner with the Redwood. In addition to BMW, Redwood Materials partners with Ford Motor Company, Volvo, Toyota, Volkswagen, Panasonic consumer electronics and Lyft Bikes to recover critical materials from their used battery packs.
Redwood Materials also recycles production scrap from Ultium Cells, a joint battery manufacturing venture of General Motors and LG Energy Solutions. That scrap includes critical materials in batteries that didn’t pass quality tests, plus materials shaved off the edges of cathodes and anodes in the production process.
“The materials inside of a battery are nearly infinitely recyclable and are not consumed or lost in their lifetime of using in the vehicle,” BMW of North America officials explained in September 2024, announcing the company’s battery recycling project with Redwood Materials. “Additionally, Redwood’s processes have a significantly smaller environmental impact than conventional mining or other recycling technologies, reducing energy [use] by 80%, CO2 emissions by 70%, and water [use] by 80%.”
Battery passports will enhance traceability, recycling and reuse
A metallic cathode plus a lithium-coated anode, with a liquid electrolyte sandwiched in between, enables the chemical reactions that Li-ion batteries use to store and discharge energy. Li-ion batteries can then be recharged by connecting them to a source of electricity.
Recycling batteries to create a circular lithium lifecycle isn’t an easy process. Battery materials and chemistries can vary widely, even among Li-ion batteries. Meanwhile, dozens of new material combinations are being developed in research laboratories worldwide. The recycling process varies for each formulation. How manufacturers assemble the materials to create batteries also varies widely.
Because Redwood Materials partners with automakers, it knows exactly what materials are used in each manufacturer’s cells and how they are assembled. Many recyclers don’t have that luxury, however. To make their job easier, the EU has mandated that all batteries must come with a “Battery Passport” – an electronic record of the materials and chemistries used in a battery, where materials were sourced, how and where the battery was manufactured, how it was used and how much useful life remains. The data can be accessed with a quick-response (QR) code printed on each battery’s label.
“You need to replace the batteries in a car when its state-of-health (SOH) reaches 80% or less,” said Nicolas Vallin, battery and gigafactory consultant senior specialist with the Transportation & Mobility Industry at Dassault Systèmes. “Below 80% SOH you don’t get a 300-mile range, but only perhaps a 220-mile range. And you can’t accelerate quickly, so you need to replace the battery packs in the car. For energy storage, however, 80% SOH is still very good, so you can repurpose those batteries for energy storage on the electrical grid, to store energy generated by solar panels and windmills, for example. This is the best use, and many used EV batteries will get a second life this way.”
Timing of the Battery Passport legislation is critical, Vallin said, because batteries from the first EV automobiles are just now reaching end of life and becoming available for reuse or recycling.
“History shows us that the EU regulations, or something very similar, will be adopted in North America and Asia, too, because cars from all three regions are sold into the others,” Vallin said. “If you need to do it for cars sold in Europe, you will already have the processes to do it for cars sold in North America and Asia, too.”
Battery passports: where to get the data?
EV battery passports are only as good as the data they contain, so where will automakers get the data? Much of it is already available in the software systems the companies use to design and build their cars, Vallin said. That data, and the ability to transfer it to a battery passport, will improve as battery sourcing and production moves closer to where EVs are manufactured.
“Automotive companies have very rich data in their design, simulation and manufacturing systems, including a complete bill of materials used in every component, where it was sourced, and where and how it was manufactured,” Vallin said. “All of this information can be repurposed to populate the battery passport with the required data.”
To report on battery performance, life expectancies and state of health, Vallin said, manufacturers will count on a combination of simulated and real-world data.
“Simulation of physics and chemistry, combined with artificial intelligence (AI) and machine learning (ML), can help automotive companies accurately predict the life of most cells in a battery pack,” Vallin said. “These companies have deep knowledge regarding the formulation of each of the material components in the battery cells, including actual test results and theoretical projections. At Dassault Systèmes, we can take their formulas and simulate the results for them, or we can leverage their actual results to seed our models and predict the life of the cells based on their chemical formulas.”
As new chemistries are proposed, simulation can help predict which ones will succeed and which ones should be abandoned, before companies make significant investments in developing them.
“Automotive companies and battery makers are always looking for better formulations that deliver more power and longer life,” he said. “If you change the formula, however, you will change the fundamental properties of the cell. But we can predict the results of the different chemistries. In fact, simulation can measure some things that you cannot measure physically, though you will still need physical tests to verify the simulations.”
While simulations can predict the life of most battery cells under standard conditions, real-world use or damage can cause used batteries to vary from the norm.
“EV battery packs can have hundreds or thousands of battery cells, and they are not all used at the same level,” Vallin said. “Most companies need support to get the data from the battery management systems for these packs, so they know which cells to reuse for energy storage on the grid and which ones to recycle. We also provide modeling and simulation of the disassembly process for these battery packs, in compliance with the EU program REINFORCE. Supporting their decision-making process by analyzing the value of a battery’s second-life reuse, versus the economic value of the materials to be reclaimed in recycling, is a strong value of our consulting services.”
Powering circular value networks
Reusing Li-ion batteries from EVs for energy storage on the electrical grid, and recycling them to recover the high-value critical materials they contain, is not only good for the future of EV adoption. It’s also good for the planet.
Supported by EU regulations that require recycled lithium and other critical materials to be incorporated into new EV batteries – and that increase the amount of required recycled content each year – the market for recycled materials is assured.
Meanwhile, programs like Reinforce and the Battery Passport are making it easier for recyclers to get the information they need to effectively reclaim critical materials – and sophisticated design, simulation and manufacturing execution software solutions and consulting services are making it easier for EV and battery-pack manufacturers to provide the data that drives this vital piece of the circular economy.