The lithium-ion battery is one of the most promising technologies for energy storage in many recent and emerging applications. However, the cost of lithium-ion batteries limits their penetration in the public market. Energy input is a significant cost driver for lithium batteries due to both the electrical and thermal energy required in the production process. The drying process requires 45–57% of the energy consumption of the production process according to a model presented in this paper. The model is used as a base for quantifying the energy and temperatures at each step, as replacing electric energy with thermal energy is considered. In Iceland, it is possible to use geothermal steam as a thermal resource in the drying process. The most feasible type of dryer and heating method for lithium batteries would be a tray dryer (batch) using a conduction heating method under vacuum operation. Replacing conventional heat sources with heat from geothermal steam in Iceland, we can lower the energy cost to 0.008USD/Ah from 0.13USD/Ah based on average European energy prices. The energy expenditure after 15 years operation could be close to 2% of total expenditure using this renewable resource, down from 12 to 15% in other European countries. According to our profitability model, the internal rate of return of this project will increase from 11% to 23% by replacing the energy source. The impact on carbon emissions amounts to 393.4–215.1 g/Ah lower releases of CO2 per year, which is only 2–5% of carbon emissions related to battery production using traditional energy sources.