Why old lithium-ion batteries are exciting investors

• Research shows recycled lithium ion-batteries perform as well as new ones
• Investors have pumped $70m into lithium-ion recycler Battery Resourcers
• Company will use funds to open two plants in Europe by end of 2022

What’s the key to becoming a great investor?

Billionaire Warren Buffett once said that his philosophy could be summed up thus: “Be fearful when others are greedy and be greedy when others are fearful.”

One way of interpreting the second part of this mantra is that it can pay to invest, and invest heavily, in opportunities that may have caused other investors to have reservations.

Recycled lithium-ion batteries may just be a case in point.

Don’t ignore recycled batteries

There has been some talk in the industry of people “looking down their noses” at recycled lithium-ion batteries in the belief that new batteries are more effective.

But new research published this month may cause many investors to think again.

A study led by Yan Wang, professor in the Department of Mechanical and Materials Engineering at Worcester Polytechnic Institute [WPI] in Massachusetts in the US has concluded that recycled materials from used lithium-ion batteries “perform at least as well as new commercial materials, making the recycled materials a potentially green and profitable resource for battery producers.”

The study involved researchers using physical tests, imaging, and computer simulations to compare new cathode materials to cathode materials recovered from old electric vehicle batteries.

Recycled batteries outperforming new ones?

It should be noted that Wang said materials from used lithium-ion batteries performed “at least as well” as new commercial materials. In some cases, they actually performed better.

Wang remarked: ““As demand grows for lithium-ion batteries, it will be important to recycle materials from used batteries, especially batteries from electric vehicles,” Wang said. He continued: “Battery manufacturers want to know that recycled cathode materials are not inferior to new cathode materials. This research shows that recycled materials can electrochemically match or outperform pristine, state-of-the-art cathode materials from tier one suppliers.”

Convincing investors

The question is: will investors buy into Wang’s theory?

Some are already on board. The recycling of lithium-ion batteries is being commercialised by Battery Resourcers, a company co-founded by Wang. Last month, Battery Resourcers raised $70 million in mid-round funding to scale its commercial operations across the US, the company’s home territory, and Europe.

Expansion in Europe was seen as a priority because, in the view of Battery Resourcers CEO Michael O’Kronley, with European lawmakers currently mandating battery recycling on the part of OEMs, and “likely” to mandate the use of recycled materials in batteries, the European market will be larger than the North American market.

Battery Resourcers doesn’t only recycle batteries, it has also developed a process that turns the recycled material back into critical battery materials — specifically, nickel-manganese-cobalt cathodes and purified graphite, a material used in anodes. The company’s plan is then to sell those materials right back to the battery manufacturer.

As the recent funding round proves, investors have examined Battery Resourcers business plan and they like what they see.

Who has invested in Battery Resourcers latest funding round?

The latest funding round saw participation from the following:

Hitachi Ventures
Earlier this month, Hitachi Ventures announced the launch of a second $150 million fund, which will make strategic investments in “innovative funds” in the environmental sphere. The first Hitachi Ventures fund also started with a size of $150 million. Hitachi Ventures is led by CEO Stefan Gabriel, who for more than 20 years held responsibilities in manufacturing engineering and global strategy at BMW Group Powertrain. After working as president of 3M New Ventures, the corporate venture capital (CVC) arm of 3M Limited, Gabriel took up his current position in 2019.

Orbia Ventures
Orbia Ventures describes itself as a “community of companies” which focusses its investments on areas such as food growth, water management and infrastructure development. Orbia reported revenues of $6.4 billion in 2020. Key figures at Orbia Ventures include managing director Eitan Dekel (who has become a Battery Resourcers board member).

InMotion Ventures
The size of InMotion Ventures’ fund has not been publicly disclosed, but it makes investments of between £100,000 to £3 million. InMotion Ventures is the venture capital arm of Jaguar Land Rover. Key figures at InMotion include managing director Sebastian Peck, who was formerly CFO and COO at Digital Science, a provider of scientific information services and research productivity software.

Doral Energy
Doral is an Israel-based renewable energy and environmental infrastructure developer. Its US subsidiary, Doral LLC, recently completed a deal with the Israeli insurance firm, Migdal Insurance, in which Migdal agreed to invest approximately $355 million in Doral LLC. The transaction included the acquisition of 20% of Doral LLC. Key figures include Doral CEO Yaki Noyman, Doral LLC chairman and co-founder Dori Davidovitz and Doral LLC CEO and co-founder Nick Cohen. Last month, Doral LLC appointed Yossi Cohen, former head of Israeli Mossad, the national intelligence agency of Israel, as a director. The investment in Battery Resourcers was led by Doral Energy-Tech Ventures managing director Roee Furman.

At One Ventures
Earlier this month, At One Ventures closed on its Fund I, which was focussed on injecting $150 million into environmental technology startups. Key figures include founding partner Tom Chi and partner Laurie Menoud (who has become a Battery Resourcers board member).

TDK Ventures
With total assets under management of $200 million, key figures at TDK Ventures include investment directors Andrew Maywah and Anil Achyuta and president Nicolas Sauvage.

TRUMPF Venture
TRUMPF Venture is the venture capital arm of manufacturing software company TRUMPF. It focusses primarily on seed and (pre-)series A financing. The €40 million fund makes investments of between €500,000 and €2 million. Key figures include managing director Dieter Kraft.

What’s next for Battery Resourcers?

The company says two additional commercial-scale sites in Europe will be operational by the end of next year. In total, Battery Resourcers aims to have 30,000 tons of recycling capacity by the end of next year across three commercial-scale locations. Cathode material production will be added to the sites in 2023.

The aim is to challenge Asia’s dominance of critical battery material production. It’s not going to be easy, but O’Kronley is confident. He believes the industry is shifting from being highly concentrated in specific locations to a more global operation.

It’s a hunch that has been given significant backing by investors, and with new evidence showing that in some cases, used lithium-ion battery materials can outperform new ones, Battery Resourcers' future looks bright.

Image (clockwise from top left): Anil Achyuta (TDK Ventures); Andrew Maywah (TDK Ventures); Michael O’Kronley (Battery Resources); Yan Wang (Battery Resourcers); Laurie Menoud (At One Ventures); Stefan Gabriel (Hitachi Ventures); Dieter Kraft (TRUMPF Venture); Eitan Dekel (Orbia Ventures)