American car giant Tesla is now getting into battery recycling with the development of a system that will process both battery manufacturing scrap and end-of-life batteries.

Tesla this week released an impact report and in it outlined what it was doing in the way of battery recycling.

The carmaker said it was developing the “unique” battery recycling system at its Gigafactory in Nevada.

The idea is that the system will maximise the recovery of critical minerals such as lithium and cobalt, along with all metals used in the battery cell, such as copper, aluminium and steel.

Tesla said all of those metals would be recovered in forms optimised for new battery material production.

The problem with current recycling methods is the lithium cannot be recovered because it is destroyed in the process.

A new way to recover lithium

In Australia, Lithium Australia (ASX:LIT) has developed a process that recovers all of the materials from old batteries, including the lithium.

“With mechanisms that utilise a furnace for recycling, you lose the lithium,” managing director Adrian Griffin told Stockhead previously.

“What you need to do is develop a recycling technique that recovers all of the metals including the lithium.”

Right now Tesla works with third-party recyclers to process all scrap and end-of-life batteries to recover valuable metals.

But it is now starting to receive dead batteries back.

“Since Tesla battery packs are made to last many years, we are only just starting to receive these batteries back from the field,” Tesla said in its report.

“Currently, most of the batteries for recycling come to us through R&D, manufacturing, quality control and service operations.

“The closed-loop battery recycling process at Gigafactory 1 presents a compelling solution to move energy supply away from the fossil-fuel based practice of take, make and burn, to a more circular model of recycling end-of-life batteries for reuse over and over again.”

Tesla expects to realise “significant savings” over the longer term because the costs associated with large-scale battery material recovery and recycling are much lower than purchasing and transporting new materials.