Li-Cycle is a leading global lithium-ion battery resource recovery company. And Li-Cycle’s mission is to recover critical battery-grade materials to create a domestic closed-loop battery supply chain for a clean energy future. Pulse 2.0 interviewed Li-Cycle CEO and co-founder Ajay Kochhar to learn more about the company.
Formation Of Li-Cycle
How did the idea for Li-Cycle come together? Kochhar said:
“Li-Cycle was founded in 2016 to address a missing link in the lithium-ion battery supply chain and the future of global electrification – the lack of a truly economically and environmentally sustainable recycling solution. My co-founder and I met while working at Hatch, and drawing on our deep experience working in the lithium and battery industries, we set out to reimagine the lithium-ion battery supply chain. Our vision was to develop proprietary technology that offered a safe, economically viable and environmentally friendly solution to recover valuable metals from lithium-ion battery material.”
“Today, Li-Cycle is a leading global lithium-ion battery resource recovery and recycling company that continues to have a positive impact on the global transition to clean energy. We believe it’s still the beginning of our journey and there are significant opportunities ahead.”
Core Products And Features
What are the company’s core products and features? Kochhar shared:
“Li-Cycle’s patented Spoke & Hub Technologies™ and business model enables us to safely receive and recycle all lithium-ion batteries regardless of condition, form factor, and state-of-charge to produce critical battery materials. Our technology enables up to a 95% recovery rate to return critical materials back to the supply chain.”
“At our Spokes, lithium-ion battery material (including spent batteries and battery manufacturing scrap) is safely recycled through a proprietary submerged shredding process to produce plastics, a mixture of aluminum and copper, and, importantly, black mass, a powder-like substance which contains a number of valuable metals, including lithium, nickel, and cobalt. Li-Cycle’s patented and environmentally friendly ‘Generation 3’ Spoke technology can directly process all forms of lithium-ion batteries, including full electric vehicle (EV) battery packs, without the need for discharging, dismantling or using any thermal processes, which enhances safety and efficiency. The ability to remove the need for dismantling and discharging are important value differentiators, especially as battery manufacturing evolves and there are more ‘structured packs’ for EVs, which cannot be easily dismantled.”
“Importantly, our Spoke process is designed to have zero wastewater discharge and have zero combustion and direct greenhouse gas emissions.”
“At Li-Cycle’s Hub facilities, the second stage of our vertically integrated technologies and process, we plan to process black mass to produce critical battery materials, such as lithium carbonate, or the fundamental building blocks of batteries. Li-Cycle plans to use hydrometallurgy at its Hubs, which is a low-temperature and environmentally friendly approach.”
Challenges Faced
What challenges have Kochhar and the team faced in building the company? Kochhar acknowledged:
“Li-Cycle is innovating and creating a first-of-its kind project in Rochester, New York, which is expected to be our first commercial scale facility using our Hub technology. As with many other clean tech projects, we experienced a speed bump, and we had to pause construction at the site in October 2023 due to increased capital costs.”
“Although the construction pause caused challenges for our business in late 2023, we are excited about the future. We are completing a comprehensive review and evaluating financing and strategic alternatives.”
“Li-Cycle is focused on the long term – we expect to continue to help support the transition to clean energy through our innovative and novel recycling technologies.”
Customer Success Stories
After asking Kochhar about customer success stories, he highlighted:
“We are really fortunate to have Glencore as one of our strategic partners and investors. In June 2022, we launched a long-term global recycling partnership and secured a $200 million investment from Glencore. As part of our partnership, our goal is to create an integrated platform to supply a global customer base with both primary and recycled critical battery materials.”
“Glencore is an important battery feedstock partner for Li-Cycle’s Spoke facilities, as well as a future supplier of both black mass and key reagents for our future Hub facilities. In addition, Glencore complements our existing partners through off-take and marketing of Li-Cycle’s end products and certain by-products produced at our Spokes and future Hubs.”
“Since 2022, our partnership has grown even stronger, and in March of 2024, we secured another $75 million investment from Glencore. This investment further demonstrates Glencore’s endorsement of Li-Cycle’s Spoke & Hub model, our patented recycling technology, and, importantly, our development plans for the Rochester Hub.”
Total Addressable Market
What total addressable market (TAM) size is the company pursuing? Kochhar assessed:
“The need for lithium-ion battery recycling is an urgent challenge in North America and Europe, and Li-Cycle sees primarily two ‘phases’ of growth in lithium-ion battery recycling demand.”
“On average, 10% (typically more during ramp-up) of battery production ends up as manufacturing scrap, and as the industry continues to ramp up this creates a significant amount of material that requires recycling. For those closely following the industry, the true amount of battery manufacturing scrap might be underestimated as all types of scrap might not be accounted for and there is a significant ramp up curve for new battery gigafactories. In addition to battery manufacturing scrap – in the near-term – EV recalls happen from time to time and it’s important that the valuable material is returned back into the supply chain in a safe and sustainable manner. The second phase of growth is driven by end-of-life EV batteries.”
“For perspective, in 2024, Li-Cycle expects that approximately 210,000 tonnes of battery material were available for recycling in North America and Europe. By 2030, Li-Cycle expects that there will be approximately 1.2 million tonnes of material available for recycling per year, which is an expected 6x increase. This is in line with the growing adoption of EVs and hybrids, which is expected to grow to approximately 17 million vehicles sold per year by 2030, compared with 3.7 million in 2023, in North America and Europe.”
“There is considerable demand for battery recycling, and we expect it will continue to play a critical role in fueling the growth of the EV revolution and global electrification more broadly.”
Differentiation From The Competition
What differentiates the company from its competition? Kochhar affirmed:
“The core of Li-Cycle’s competitive advantage is our patented technologies. As mentioned, our Spokes leverage a proprietary submerged shredding process, which requires no manual disassembly, discharging or thermal processes. These are significant differentiators compared to most of our competition.”
“On the Hub side, we use hydrometallurgy or a ‘wet-chemistry’ approach, which is sustainable and has efficient recovery rates. Importantly, Li-Cycle can recycle all types of lithium-ion batteries and all their components, including LFP, compared to other technologies that can only recycle select components and certain types of batteries.”
“In addition to our technological advantages, we also have built a robust global commercial network which consist of some of the largest automakers and battery manufacturers in the world, which helps us strengthen and reinforce our competitive advantage. For example, in the first half of 2024, our largest customer source of revenue was a leading U.S.-headquartered vertically integrated EV and battery manufacturer with a substantial global EV market share, and four of our top five global customers are EV OEMs.”
Future Company Goals
What are some of the company’s future company goals? Kochhar concluded:
“Li-Cycle remains focused on our key priorities of driving down costs through our cash preservation plan, reviewing our go-forward strategy for the Rochester Hub, and evaluating additional financing and strategic alternatives, including working closely with the U.S. Department of Energy on the conditional commitment for a loan for gross proceeds of up to $375 million.”
“In addition to advancing our review of the Rochester Hub, we are focused on optimizing our Spoke facilities. Supporting our key automotive and strategic partners, we plan to drive enhancements in productivity and throughput to improve the economics of our Spokes.”
“Ultimately, Li-Cycle’s vision is to create local, closed loop supply chains of battery materials to fuel the clean energy transition in a truly circular manner. As mentioned, we see immense opportunity ahead for the recycling market and it’s going to be interesting to see how our industry can catch up with capacity to meet the accelerating demand. We are excited for the road ahead and for Li-Cycle to continue to play a key role in our electric future.”
