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But Kelty says the economics of recycling depend largely on the chemistries of the lithium-ion batteries being used. He adds that lithium is currently one of the least valuable metals to retrieve. For example, the lithium in a Tesla Roadster battery pack would represent roughly $140 of a system with a replacement cost of $36,000. For most lithium-ion batteries, the lithium represents less than 3 percent of production cost.

“The lithium part is a really negligible cost when you compare it to other metals; nickel, cobalt, those are going to be the biggest drivers [of recycling],” says Kelty, adding that Tesla actually makes money by recycling just the nonlithium recycled components of its batteries. “So while we’ve been reading plenty of articles about the industry running out of lithium, it’s totally missing the mark. There’s plenty of lithium out there.”

Estimates range, but cobalt sells on the market for about $20 per pound, compared to $3 per pound for lithium carbonate. Cobalt, a byproduct of nickel and copper mining, is also scarcer and half of the world’s supply comes from the Democratic Republic of Congo, a politically unstable region.

Some lithium-ion chemistries are less cost effective to recycle. For example, the lithium iron phosphate batteries produced by A123 Systems don’t yield as much value back. The lower-cost materials in A123’s batteries give the company an edge over competitors but also make its batteries less economical to recycle.

The lithium situation could change. Industry research consultant Tru Group says the global recession has led to a large surplus of lithium in the market, keeping prices low. The consultancy, however, expects that by 2013, supply and demand will be in balance again and that a production crunch could occur around 2017 and beyond.

Over the long term, some observers believe the mass introduction of plug-in hybrid and electric vehicles, combined with the fact that much of the world’s lithium reserves lie in foreign and potentially unfriendly countries, could lead to a large spike in the price of lithium carbonate. The concern is that we could end up trading “peak oil” for “peak lithium.”

Gaines is looking at the scarcity issue closely. She is overseeing a four-year project at Argonne that will assess the long-term demand for lithium-ion battery materials and recycling infrastructure. Gaines says research to date shows that demand could be met until 2050, even if plug-in vehicle sales grow dramatically. But recycling will be crucial to helping the US become less dependent on foreign sources of lithium. “We show that recycling would alleviate potentially tight supplies,” she says.

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Credit: Tesla Motors

Tagged: Business, Energy, battery, lithium-ion, plug-in vehicles

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