Problem: A shortage of materials needed to create lithium-ion batteries is looming in the U.S.
As described by BloombergNEF in October 2017,
Some 37% of mined lithium is used in lithium-ion batteries. It is the only truly critical material in those batteries and is key to their high energy densities. In the near term, there may be supply shortages of lithium. These are likely to ease during the early 2020s, but supply is likely to be squeezed after 2024 unless more projects are commissioned. Those could include opening up new mining operations, and the expansion of existing operations by building more evaporation pools – in the case of lithium brine projects. Traditionally, lithium mining has been dominated by a few large miners, but the recent boom in demand has led to an upsurge in the number of smaller operators.
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Solution: Lithium-ion batteries are everywhere — in phones, laptops, tablets, cameras and increasingly cars. Demand for lithium-ion batteries has risen sharply in the past five years and is expected to grow from a $44.2 billion market in 2020 to a $94.4 billion market by 2025, mostly due to the boom in electric cars. And a shortage of lithium-ion batteries is looming in the U.S. (Source, CNBC)
What if a business could create a way to recycle existing lithium-ion batteries or create new battery technology to replace lithium-ion? Admittedly the latter of these two suggestions is pretty difficult, but the former is already happening. As reported by CNBC in their video “How Tesla’s Battery Mastermind Is Tackling EV's Biggest Problem,”
Former Tesla CTO and Elon Musk's right-hand man, JB Straubel, started Redwood Materials in 2017 to help address the need for more raw materials and to solve the problem of e-waste. The company recycles end-of-life batteries and then supplies battery makers and auto companies with materials in short supply as EV production surges around the world. Straubel gave CNBC an inside look at its first recycling facility in Carson City, Nevada
Redwood is already selling some of these recouped materials to Panasonic Energy of North America to create new batteries.
Generally, batteries today are made up of a variety of raw materials including nickel, graphite, cobalt, copper, and lithium. However there seem to be projected 5 years shortages in Lithium, Cobalt, and Copper. Given the inevitability of this Redwood and others are looing to reuse and recycle existing batteries that have reached the end-of-life to recycle and reuse materials while reducing the burden for miners.
So where is the market opportunity?
My thought is that battery recycling will become an industry dominated by more than one major player. Just as there are a variety of different materials miners (a few that investors like are Neo Lithium Corp, Galaxy Resources, Jervois Mining, First Cobalt, Amur Minerals Corp., and more), my hunch is that there will be a number of different battery recyclers as well.
The major parts of the business will be receiving old batteries, refining old batteries, and sprucing to develop a way to re-sell these raw materials back to manufacturers. Unlike existing competitors, this business could make inroads in the battery receiving space by paying individual consumers for their old devices or batteries. Today, most battery recyclers have large corporate partnerships, but since the geological materials are limited, old consumer products will become an extremely large repository of materials.
In my eyes, the same way that Wayne Huizenga became a multi-millionaire by creating Waste Management and playing with trash, there is a huge market opportunity to create a billion-dollar business through battery recycling.
Monetization: Sales of these recovered batteries.
Contributed by: Michael Bervell (Billion Dollar Startup Ideas)