By Technology transitions always raise new questions as investors and the public weigh the pros and cons of new advancements. Electric vehicles (EVs) are no exception. For years, debates have centered around the range, cost, and convenience of EVs, as well as their impact on the environment.
While concerns about EVs’ environmental friendliness persist, a recent partnership between Toyota Motor and recycling startup Redwood Materials illustrates how these concerns can be addressed.
Redwood Materials, founded by former Tesla executive J.B. Straubel, has teamed up with Toyota to establish a battery recycling and material procurement agreement. Under this agreement, Toyota will purchase cathode materials and copper from Redwood’s recycling operations.
Cathodes play a crucial role in the functioning of batteries, facilitating the movement of electrical charge. In an EV battery, cathodes consist of various elements such as lithium, iron, cobalt, and others.
Christopher Yang, Group Vice President for Business Development at Toyota Motor North America, highlights the importance of this partnership in moving closer to their goal of creating a closed-loop battery ecosystem. As more vehicles with batteries hit the roads across North America, accelerating recycling efforts and domestic component procurement become increasingly crucial.
One significant advantage of batteries is that they contain recyclable metals. Unlike oil, which is finite and gets consumed, metals can essentially last forever and be recycled. By utilizing recycled materials in EV batteries, the need for extensive mining and its associated environmental impact can be reduced.
This collaboration between Toyota and Redwood Materials sets a promising example for how the automotive industry can address environmental concerns surrounding EVs. By embracing battery recycling and domestic procurement, a greener future becomes attainable.
The transition to electric vehicles marks an important step in sustainability efforts. Through ongoing innovation and partnerships like this one, we can improve the environmental footprint of EVs and create a more sustainable transportation sector.
The Battery vs Gasoline: An Environmental Perspective
When discussing the environmental impact of electric vehicles (EVs), it is vital to consider the energy used to recharge a battery versus the energy used to produce gasoline. Interestingly, approximately 40% of electricity generated in the United States comes from sources that do not emit carbon dioxide, the primary contributor to global climate change. This includes nuclear, hydro, wind, and solar power.
While mining practices and their environmental implications are relevant, it is crucial to note that the metal industry is not comparable in size to energy markets. To illustrate this point, let’s compare Albemarle (ALB), the world’s largest lithium miner, with Exxon Mobil (XOM), a prominent oil company. Albemarle, with its lithium business, is projected to achieve sales of around $7 billion by 2023. However, if every light vehicle sold globally annually were fully electric and Albemarle maintained its market share, its sales would increase significantly to approximately $70 billion. In contrast, Exxon’s sales in 2023 are expected to reach a staggering $350 billion. It is worth noting that Albemarle possesses a greater market share in lithium than Exxon does in oil.
Additionally, it is essential not to overlook the fact that coal extraction surpasses oil extraction by approximately double. Coal is primarily burned for electricity generation purposes.
The emergence of new technologies, such as EVs, inevitably gives rise to new businesses like Redwood. Although not publicly traded yet, it demonstrates the potential for growth and innovation in this sector. Another noteworthy player is Li-Cycle (LICY), a battery recycling startup. Despite a decline of 88% in its shares over the past year, it is important to highlight that broader market indices such as the S&P 500 and Nasdaq Composite have experienced significant gains of about 14% and 26%, respectively.
Undoubtedly, starting and running businesses that cater to a growing and disruptive technology like EVs presents its own set of challenges. However, these obstacles have not deterred entrepreneurs from seizing the opportunities within this dynamic industry.
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