The share price of Toronto-based Li-Cycle Holdings Corp., which is expected to receive support from the Biden administration, dropped almost 50% when the company said it would pause building a first-of-its-kind lithium-ion battery recycling plant.
The Toronto-based firm announced it would pause work on its New York Rochester Hub, awaiting the conclusion of a strategic review, including scope and budget. Additionally, the firm stated it’s collaborating closely with the U.S. Energy Department on a $375 million loan commitment offering and is confronting rising development costs surpassing previous projections.
Li-Cycle is one of the several companies aiming to support the U.S. in meeting its surging demand for battery materials required to transition from gas-powered vehicles. To counter China’s dominant position in the industry, the government is investing billions of dollars in tax incentives and subsidies to develop a domestic supply chain.
According to the firm, its shares surged by 6% following the announcement by the Biden administration that a loan would be provided to support the building of a facility that recycles lithium-ion batteries into chemicals that can be used to power over 200,000 EVs annually.
The funding comes from the department’s Advanced Technology Vehicles Manufacturing Loan Program, and it’s part of a larger White House objective of having 50% of all car sales be zero-emissions by 2030.
The announcement coincides with congressional Republicans’ vow to discover the next Solyndra LLC in response to the criticism of the Energy Department’s acquisition of billions of dollars in new lending authority due to President Joe Biden’s landmark climate law.
Solyndra, a California solar firm that failed shortly after receiving a $535 million loan guarantee during the Obama administration, resulted in a years-long stop in loan activity amid intensive congressional inquiry.