Li-Cycle - Is this Lithium Ion Battery Recycling Stock about to Skyrocket?

Li-Cycle Stock

On August 11th, 2021 Li-Cycle began trading it’s common stock on the NYSE under the stock ticker "LICY" in a SPAC acquisition. Li-Cycle is an industry leader in lithium-ion battery resource recovery and the leading lithium-ion battery recycler in North America. On August 10th, 2021 they announced completion of their business combination with Peridot Acquisition Corp. ("Peridot").

At this point in time, it is clear that electric vehicles are the future. Companies like Tesla and Rivian are leading the way for pure EV automotive companies, but legacy auto manufacturers such as Ford and and are starting to join the race with full force and have pledged ambitious electrification goals.

But as the EV market demand, production, sales, and aftermarket continue to grow, so is the demand for eco-friendly lithium ion battery recycling solutions. That is where companies like Li-Cycle step in!

As stated by Li-Cycle CEO and co-founder Ajay Kochhar

"Consummation of our business combination with Peridot marks a significant milestone for Li-Cycle. Peridot’s support of our mission to close the battery supply chain loop has been instrumental, and we look forward to our ongoing partnership with their team. We are well-positioned to benefit from macroeconomic tailwinds as we scale our efficient and proven commercial lithium-ion recycling technology to grow in lockstep with our customers. As the electric vehicle revolution continues to ramp up, we believe our technology will be critical for supporting the growth of e-mobility globally, while ensuring sustainability and resource efficiency."

Tim Johnston, co-founder and Executive Chairman of Li-Cycles added

“The transaction with Peridot has provided us with the funding to capitalize on significant growth opportunities, advance our breakthrough commercial technology, and build lithium-ion recycling facilities across the globe….Our solution transforms material treated as waste into considerable value via a truly fit-for-purpose pathway, providing the essential building blocks for batteries that are in critical demand. Sustainable lithium-ion battery recycling is imperative today and we believe that further execution of our vision will ultimately contribute to more affordable products for the end consumer.”

Li-Cycle appears to have two main revenue opportunities. The first wave of revenue is recycling scrapped battery cells from current cell production lines. Battery cell production lines often scrap anywhere from 2-5% of their cells based on a variety of non-conformances that prevent the cell from meeting performance specifications. These battery cells get “scrapped” and cannot be assembled into electric vehicles and other products that require li-ion cells. As the production of EVs continues to grow, so will the amount of scrapped battery cells and need for recycling.

Looking at a longer-term horizon, Li-Cycle plans to generate a significant amount of revenue in the future due to the “tsunami” of deteriorated lithium ion batter cells that will arise after the first significant wave of electric vehicle adoption. Deterioration of lithium-ion batteries is observed after repeated charge/discharge cycles or long term storage.

The deterioration often appears as a decrease in capacity or increase in internal impedance of the batteries. Just like how cell phone batteries eventually die and become no longer usable, EVs battery cells will eventually deteriorate over time. Li-Cycle provides a solution for these lithium ion battery cells to be recycled in a eco-friendly manor.

Summary

There is no doubt that lithium ion battery cell recycling is a market that will grow in the future. As North America’s leading li-ion battery cell recycler and resource recovery company, they have positioned themselves well as the adoption of EVs continues to expand. Other than Tesla, there are plenty of ancillary EV companies (such as LIT) that have promising outlooks as electric vehicles take over the roads. Li-Cycle is definitely one of those companies!

What do you think!? Will Li-Cycle lead the pack in lithium ion battery cell recycling? Leave a comment below and join the conversation!