Tesla Plans to Add EV Components Recycling Facilities at its Shanghai Factory

Tesla Plans to Add EV Components Recycling Facilities at its Shanghai Factory

Author: Eric Walz   

Electric automaker Tesla plans to build facilities for recycling battery cells and other electric vehicle components such as electric motors at its factory in Shanghai, according to a document submitted by Tesla to authorities in Shanghai. The plans were first reported by Reuters.

The document also said Tesla will add manufacturing capacities for car structures and electric motor controllers. 

Tesla is currently expanding manufacturing capacity of EV components in China to localize the supply chain. It also added a factory to make EV chargers in Shanghai last year.

As more electric vehicles are being produced worldwide, automakers are exploring ways to recycle their key components, such as battery cells, to help reduce manufacturing costs and the environmental impact of producing them at scale.

Chief Executive Elon Musk said at the company's Battery Day event in Sept 2020 that he was looking at recycling batteries to supplement the supply of raw materials, including nickel and cobalt as Tesla increases its annual vehicle production.

The recycling of EV batteries is intended to reduce costs of battery, which can result in EVs that cost less to manufacture. The cost of electric vehicle batteries for Tesla and other automakers is typically measured in dollars per kilowatt hour (kWh). 

A decade ago, EV batteries cost around $1,100/kWh to produce, according to data from Bloomberg New Energy Finance (BNEF). Last year, that number fell to $156/kWh. Although its a significant drop, it's still considered to be too high to make EVs truly affordable for most people. The $100/kWh price is largely considered by the auto industry to be the point when an EV will cost roughly the same as a similar internal combustion engine powered vehicle.

China is the world's biggest auto market. Automakers sold over 1.3 million electric and plug-in hybrid vehicles in China last year. As sales of these vehicles rise, regulators are concerned that EV batteries may become a growing source of pollution in the next three to five years as the first batteries reach the end of their service life. 

Tesla is also working to recycle batteries in the U.S. Tesla's battery partner Panasonic struck a deal with battery recycling company Redwood Materials to recycle batteries from its Nevada battery factory

Redwood Materials was founded in 2017 by J.B. Straubel, who co-founded Tesla with Martin Eberhard and Marc Tarpenning and served as the company's first Chief Technical Officer. By working with Tesla's battery partner Panasonic, Straubel aims to build Redwood Materials into the world's top battery recycling company and one of the largest battery materials companies.

The company aims to reduce mining of raw materials such as nickel, copper and cobalt  by building a "closed loop" supply chain that recycles and recirculates materials retrieved from electric vehicle batteries that have reached the end of their service life. 

"People underestimate what recycling can do for the electric vehicles industry, said Celina Mikolajczak, vice president of battery technology at Panasonic Energy of North America after the pilot with Redwood Materials was announced last year. "This could have a huge impact on raw material prices and output in the future."

In Jan 2020, China's ministry of industry and information technology announced new regulations for the recycling of used new energy vehicle (NEV) power batteries, which includes new recovery requirements for major battery metals. 

The recovery rate for nickel, cobalt and manganese should not be below 98%, while the rate for lithium must be above 85%. In addition, rare earths such as cobalt are now subject to a recovery rate of no less than 97%.

Earlier this year, Musk said that standard range Model 3 vehicles built in China will use more affordable cobalt-free lithium iron phosphate (LFP) batteries. Tesla can build more affordable electric cars using LFP batteries, which cost less to produce.

Eric Walz
Eric Walz
Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.
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