Compare this with lead acid batteries. About 99% of lead acid batteries are recycled, and the recycling process itself is rather efficient.
http://www.sciencedirect.com/science/article/pii/S2214993714...
i don't see why tesla wouldn't do exactly this a decade or two from now, when there'll be 100x more lithium batteries at or near the limit of useful capacity. it could be literally next door to the gigafactory so they could feed it with a conveyor belt.
By no means am I making claims about how batteries will be recycled in the future, I just think we should base our policy decisions on the science. Recycling lithium batteries is not easy, since they tend to blow up. The main recycling processes either toss them in an incinerator, cryogenically freeze them, or chop them up in an inert atmosphere. Most of them recover negligible amounts of lithium, which is cheap to mine anyway.
Maybe there's room for recovering the raw materials effectively, and I wonder if there are upfront tradeoffs that could be exchanged to make that easier. Musk has repeatedly said that scale cost reductions leads ultimately to material cost limit and it's already up to ~50$\130$ per kwH.