Li-Cycle is one of the many companies vying to help the US meet surging demand for battery materials needed in the transition from gas-powered cars. The government is pouring billions of dollars in subsidies and tax incentives to build up a domestic supply chain, intended to help the US compete with China’s dominant industry position. The setback shows the challenges the US and the West face trying to essentially kick-start an industry from scratch.
Li-Cycle shares fell as much as 49% in New York. The stock closed at $1.23, down 46% for the day, its largest drop on record.
“The board of directors has decided to pause construction work on the Rochester Hub, pending a review of the project, including an evaluation of the go-forward phasing of its scope and budget, including construction strategy,” according to the statement. “As previously disclosed, engineering and procurement for the project are largely complete, with the current focus being on construction activities on site.”
Shares jumped 6% in February after the Biden administration announced the company’s US subsidiary would receive the loan to help finance expansion of a facility to recycle lithium-ion batteries into chemicals that can be used for the batteries of more than 200,000 electric vehicles a year. The funding is from the department’s Advanced Technology Vehicles Manufacturing Loan Program amid a broader White House goal of having half of all car sales in 2030 be zero-emissions.
The unexpected announcement comes as congressional Republicans have vowed to find the next Solyndra LLC in their criticism of the hundreds of billions of dollars in new loan authority given to the Energy Department in President Joe Biden’s signature climate law. Solyndra, a California solar manufacturer that flopped soon after receiving a $535 million loan guarantee during the Obama administration, resulted in a years-long pause in loan activity amid intense congressional scrutiny.
The Energy Department said the Li-Cycle loan is still in the conditional phase and no money has yet been distributed.
(By Joe Deaux and Ari Natter)