A Porsche-backed startup is building a massive battery recycling plant to boost Europe's EV industry

A massive battery recycling plant is being built in Germany by Cylib, a startup looking to reduce waste from EV batteries that have reached the end of their life.

Cylib, which is backed by luxury sports car firm Porsche and appliances maker Bosch, on Monday started work on the new site in the town of Dormagen, in the German federal state of North Rhine-Westphalia.

More than 180 million euros ($200 million) is being pumped into the facility, which is expected to span 236,000 square feet and will produce recycled batteries for the electric vehicle industry in Europe.

Cylib says its facility will be the largest end-to-end lithium-ion battery recycling facility in Europe.

It plans to recycle roughly 30,000 metric tons of end-of-life batteries at the facility each year, making it larger in scale than the current biggest plant, Hydrovolt, a joint venture between Swedish EV battery maker Northvolt and Norway-based aluminum and renewable energy firm Hydro.

Hydrovolt has capacity to recycle 12,000 metric tons of end-of-life batteries annually, according to Hydro's website.

Recycled batteries produced by Cylib's new facility are expected to be used by Porsche, which invested in the startup as part of a 55-million-euro funding round, a source familiar with the matter told CNBC.

The source, who preferred to remain anonymous as the information is not yet public, added that the plans are still in the early stages and have not yet been formalized.

Founded in 2022 by German entrepreneurs Lilian Schwich, her partner Gideon, and Paul Sabarny, Cylib uses water-based lithium and graphite recovery techniques to repurpose materials from batteries that have hit the end of their lifespan.

Earlier this year, the firm raised 55 million euros ($60.9 million) of financing from investors including climate-focused venture capital firm World Fund, Porsche Ventures, Bosch, and DeepTech&Climate Fonds.

Cylib said the new plant would primarily serve automotive, battery manufacturing, and chemicals clients. The startup wants it to be the first of many, with further facilities planned elsewhere in Germany and Europe within the next few years.

The new facility is being built on a brownfield site located at Chempark, an industrial space used primarily by the chemicals industry. Cylib said that the location was strategic, with pre-existing supply chains already located on-site.

Operations at the plant are scheduled to commence operations in 2026. The move is key to Cylib's ability to reach mass production, said CEO Lilian Schwich.

"Cylib reaching industrial scale production will be a key driver in building a robust European battery infrastructure," Schwich said in a press statement.

"Battery recycling is pioneering the circular economy, proving that economic success is compatible with reduced environmental impact," she added.