Tozero, a Munich-based startup that recovers valuable raw materials from recycled lithium-ion batteries, is scaling up. The startup has closed an oversubscribed €11 million (approximately $11.7 million) seed round to build its first industrial batch (AKA first-of-its-kind or FOAK) plant to ramp up production.
Currently Tozero’s pilot plant processes nine tonnes of lithium-ion battery waste per day, but the startup is aiming for unlimited capacity, with hopes of expanding its operations over the next two years.
“Other competitors have raised much more money to go to industrial plants. But our processes and technologies are so simple and efficient that nothing more is needed to reach your first industrial deployment or what the investor world calls a ‘first’ factory. “This is what we want to build.” Co-founder and CEO Dr. Sarah Fleischer (pictured above, left) told TechCrunch.
Once Tozero’s process reaches industrial speeds and capabilities, the startup says there will be no hard limits to what it can achieve in battery recycling, as long as it continues to have access to the waste stream.
“The aim of FOAK is to actually start proper serial production (manufacturing) of the product,” added co-founder and managing director Dr. Ksenija Milicevic Neumann.
“After that, unlimited, limitless, exponential growth is possible,” Fleischer argued. “Our idea is to operate our own factories globally. We focus on Germany and Europe and then go to North America. But once you reach that (FOAK) factory, you can expand Tozero in different dimensions around the world. So this will be a key milestone in our next phase of growth.”
The startup said global lithium demand is expected to quadruple to 3.1 million tonnes by 2030, driven by the rapid adoption of electric vehicles and growing demand for large-scale renewable energy batteries. For context, lithium mining production last year was only 180,000 tonnes, so recycling will play a key role in meeting this demand.
The EU’s Battery Directive will also mandate that at least 80% of lithium be recovered from batteries by 2031.
“Technology works… So the core parts of our technology are already locked in. Now we just have to industrialize it,” Fleischer said.
Resolving recycling bottlenecks
The startup is solving the bottleneck in lithium battery recycling using an aqueous carbonation recovery process that is more environmentally friendly than traditional pyrometallurgy (smelting). The lithium recovery method does not use strong acids like other battery recycling processes.
Tozero says this method results in significantly lower emissions than mining (70% lower).
“The security of raw materials is in some ways tied to national security,” Fleischer said. “There are too many industries in Europe that are short of the material because they do not produce lithium carbonate in Europe. We are importing. (European Commission President) Ursula von der Leyen said that we import more than 97% of our lithium carbonate from China. So we are very dependent on the Eastern Front and the mining industry.”
Access to the black mass, a by-product of mechanical recycling of lithium batteries that Tozero processes, is not restricted across borders. In terms of competition, Fleischer describes it as “a completely blue ocean market,” with most battery recycling efforts focused elsewhere. The startup says it can blend waste streams using black gunk from all types of lithium-ion batteries.
“Lithium will always be inside (the battery for recycling), but innovations in battery manufacturing are changing other factors. So I don’t care if it has nickel or, for example, what percent less or more nickel it has. Cobalt is lithium, but it is always there,” said Milicevic Neumann.
Tozero also recovers graphite from black bulk waste streams. The startup says its focus on these two critical raw materials is its “key differentiation” from other battery recycling companies.
The focus on lithium is also why startups are knocking on customers’ doors.
“Customers are flocking here,” Fleischer said, noting that market demand for many industrial use cases in Europe is “so high.” Tozero has lined up customers with “over a billion purchase values who want to have our products,” she said.
Tozero delivered its first recycled high-purity lithium to a commercial customer in April this year, nine months after opening a pilot facility in Germany.
The need for speed
Tozero was only founded in 2022, so how has it achieved what the bigger players in this space have clearly failed to manage over the past few decades? They say startups come down to focus, speed and creative thinking.
Fleischer argued that getting up to speed requires getting creative when building hardware, explaining that the biggest challenge for hardware startups is the delivery time it takes to get the equipment they need to scale.
“We break things quickly, learn, iterate, and improve at a very rapid pace. It’s probably like Elon Musk’s SpaceX kind of principle. Just build stuff and see what happens (what happens) until it breaks, learn from it, and iterate and improve at a very fast pace. It’s a fast sprint, which is very unfamiliar for a hardware company,” Fleischer said.
“I would say we are quick to protect ourselves,” she added, confirming that Tozero’s approach is based on “process innovations” that are protected as trade secrets but not patents. “The entire process, the steps or parameters, the sequence, the way to do certain tasks, etc. are completely our ‘Coca-Cola’ (trade secret) recipe,” she added.
Tozero believes it can expand its approach to recover other raw materials that could be used as “energy sources,” but does not specify which materials could be added later.
Our most important mission is to eliminate waste of important raw materials. “We are keenly aware of the broader challenges that come with decarbonizing in a sustainable way,” Milicevic Neumann told TechCrunch. “So we want to also focus on the recycling of other materials in the future.”
But if it wants to have a real impact, shouldn’t Tozero license its trade secrets to others? The pair say they haven’t fully decided on an approach and are open to partnerships, but prefer to maintain control over the process as they scale.
“Operations-wise, we believe that we can only deliver the highest quality if we operate our own factories,” Fleischer said. “This can also be done with partners. I mean, we’re open to it. So I don’t want to say yes or no to licensing. We would be happy to expand our partnership if it would help, but we will run the factory ourselves.”
Tozero’s seed round was led by NordicNinja, with participation from new investors In-Q-Tel (an American strategic public-private fund), Honda and global infrastructure engineering giant JGC Group. The startup’s €3.5 million pre-seed round, which closed about two years ago, was led by Berlin-based Atlantic Labs. To date, Tozero has raised €17 million, including a €2.5 million grant from the European Innovation Council, the EU’s R&D support agency.
“Tozero’s innovative approach to battery recycling is exactly what Europe needs to secure key supplies in the global electrification race, and Japan is eager to collaborate,” Shin Nikkuni, co-founder and managing partner of NordicNinja, said in a statement. . “As two outstanding founders, Sarah and Ksenija have the expertise and drive to change the landscape of sustainable battery solutions. We are excited to support the tozero team to scale its technology and commercial operations and contribute to a more sustainable and independent energy future for all.”
