Tozero, a Munich-based startup that recovers valuable raw materials from recycled lithium-ion batteries, is gearing up to scale. The startup just closed an oversubscribed €11 million seed round (around $11.7M) to step up production by building its first industrial deployment (A.K.A first-of-a-kind or FOAK) plant.

Currently, Tozero’s pilot plant processes nine tonnes of lithium-ion battery waste per day, but the startup is shooting for unlimited capacity in what it hopes will be just another couple of years of scaling its business.

“Other competitors raise way more money to get to industrial plant. But as our process and our technology is so lean and efficient we don’t require more to get to our first industrial deployment, or what the investor world would call the ‘first of a kind’ plant. That’s what we’re aiming to build,” co-founder and CEO Sarah Fleischer (pictured above, left) told TechCrunch.

Once Tozero’s process hits industrial pace and functionality, the startup says there will be no hard limits on what it can achieve in battery recycling as long as it can keep accessing waste streams.

“The purpose of the FOAK is really to enter the proper continuous production — manufacturing — of the product,” co-founder and managing director, Dr. Ksenija Milicevic Neumann, added.

“After that, it’s unlimited, infinite, exponential growth possible,” Fleischer claimed. “Our idea is to operate the plants ourselves worldwide. We focus on Germany, on Europe, and then we go to North America. But after we reach that [FOAK] plant, we can expand Tozero on multiple dimensions around the world. So that’s going to be a key milestone for the next growth phase.”

The startup pointed to projections that global demand for lithium is expected to quadruple to 3.1 million metric tons by 2030, driven by rapid uptake of electric vehicles and growing need for large-scale renewable energy batteries. For context, lithium mining production yielded only 180,000 metric tons last year, so recycling will have a critical role to play in servicing that demand.

The EU’s Battery Directive will also make it mandatory that at least 80% of lithium must be recovered from batteries by 2031. 

“The technology works… So the core part of our technology is already nailed. Now we just have to industrialize it,” Fleischer said.

Smashing recycling bottlenecks

The startup is tackling bottlenecks in lithium battery recycling using a water-based carbonation recovery process that’s more environmentally friendly than conventional pyrometallurgy (smelting). Its method of reclaiming lithium also doesn’t entail the use of harsh acids, as can be the case with other battery recycling processes.

Tozero says its method also results in substantially lower emissions — 70% lower — than mining.

“The security of the raw material — it’s national security in a way,” Fleischer said. “There are so many underserved industries here in Europe that are starving for the material because Europe doesn’t produce lithium carbonate; we’re importing. If you look at [European Commission president] Ursula von der Leyen, she makes statements that we import over 97% of the lithium carbonate from China. So we’re highly dependent on the eastern front and mining industries.”

Access to black mass, the byproduct of mechanical recycling of lithium batteries that Tozero processes, is not restricted across borders. And on the competition front, Fleischer describes this as a “completely blue ocean market,” with battery recycling efforts mostly focused elsewhere. The startup says it can use black mass from any type of lithium-ion batteries so the waste streams can be mixed.

“Lithium will be always inside [the batteries for recycling], but the other elements are changing — with innovations in battery manufacturing — so we don’t care if there is nickel, or if it’s a few percent less or more, for example, cobalt, but lithium is always there,” said Milicevic Neumann.

Tozero also reclaims graphite from the black mass waste streams. The startup says its focus on these two critical raw materials is a “key differentiation” versus other battery recycling players.

The focus on lithium is also why the startup has customers beating a path to its door.

“Customers are just storming this place,” Fleischer said, couching market demand as “way too high” for many industrial use-cases in Europe. Tozero has lined up customers worth “over a billion of off-take that are keen to have our material,” she said.

Tozero delivered its first batch of recycled high-purity lithium to commercial customers this April, nine months after opening its pilot facility in Germany.

The need for speed

Tozero was only founded in 2022, so how has it achieved something larger players in the space evidently haven’t managed over the past couple of decades? The startup says it boils down to having a tight focus, being fast and thinking creatively.

Being fast requires being creative when you’re building hardware, Fleischer argued, explaining that the biggest challenge for hardware startups is the issue of delivery times for getting the equipment needed to scale.

“We break things fast, learn, iterate and improve at a very fast pace — probably like Elon Musk’s SpaceX kind of principle — just get stuff building and see [what happens] until things break, learn from it, and iterate and improve in very fast sprints, which is very unfamiliar for hardware companies,” said Fleischer.

“I would say we protect ourselves with speed,” she added, confirming that Tozero’s approach is based on a “process innovation” that’s protected as a trade secret, though it’s not patented. “The entire process, steps or parameters, the order, how we do specific things, that is completely our ‘Coca Cola’ [trade secret] recipe,” she added.

Tozero believes it can expand its approach to reclaim other raw materials that could be used as “energy sources,” though it wouldn’t specify which materials it may add later.

The overarching mission is to get to zero waste of critical raw materials. “We’re quite aware of [the broader challenges entailed in decarbonizing in a sustainable way],” Milicevic Neumann told TechCrunch. “So we want also to focus on recycling of some other materials in the future as well.”

But if it wants to achieve real impact, wouldn’t Tozero have to license its trade secrets to others? The pair say they haven’t fully decided their approach, but prefer to retain control over the process as they scale — though they are open to partnerships.

“On the operational side, we believe we can only really deliver the highest quality if we operate the plants ourselves,” said Fleischer. “This can be also with partners. I mean, we’re open for that. So I don’t want to say ‘yes’ or ‘no’ to licensing. Partnerships are great to scale, if helpful, but we’re going to operate our plants ourselves.”

Tozero’s seed round was led by NordicNinja, with participation from new investors In-Q-Tel (the U.S. strategic public-private fund), Honda, and global infrastructure engineering giant JGC Group. The startup’s €3.5 million pre-seed round, closed around two years ago, was led by Berlin-based Atlantic Labs. To date, Tozero has raised €17 million, which includes a €2.5 million grant from the EU’s R&D support arm, the European Innovation Council.

“Tozero’s innovative approach to battery recycling is exactly what Europe needs to secure key supplies in the global electrification race and Japan would love to collaborate,” said Shin Nikkuni, co-founder and managing partner at NordicNinja, in a statement. “Sarah and Ksenija, two exceptional founders, have the expertise and drive to transform the landscape for sustainable battery solutions. We’re excited to support the tozero team in scaling its technology and commercial operation and contributing to a more sustainable and independent energy future for all.” 

This report was updated with a correction to Sarah Fleischer’s title

Just outside of Munich, a startup plans a new process to recycle Lithium-ion batteries