Redwood Materials Inc., the battery recycling company created by Tesla Inc. co-founder J.B. Straubel, has been keeping a big secret: It isn’t really a recycling company.
Sure, Redwood has risen quickly to become the biggest lithium-ion battery recycler in the U.S. But Straubel didn’t leave Tesla in 2019 just to clean out America’s junk drawers. His broader goal, described to Bloomberg for the first time, is to move a huge chunk of the battery-component industry from Asia to the U.S.
“It’s both inspiring and terrifying to see so many nations and car companies announcing their shift to electric vehicles,” Straubel said. “But there’s a massive gap in what needs to happen.”
To fill that gap, Straubel has set out to build one of the largest battery materials factories in the world. Redwood, which currently operates three facilities in Nevada, is searching for a location farther east to build a new million-square-foot factory. At a cost of well over $1 billion, according to Straubel, the addition will enable Redwood to become a major U.S. producer of cathodes. (Every battery has two electrodes — an anode and a cathode — between which trillions of charged lithium atoms travel. It’s the cathode that largely determines a battery’s cost, performance and environmental footprint.)
Straubel says the U.S. factory will produce material for 100 gigawatt-hours of batteries a year by the end of 2025. That’s enough for about 1.3 million long-range vehicles a year, on par with the biggest producers in Asia. By 2030, the same facility will ramp up to 500 gigawatt-hours a year, he says. At today’s prices, that’s $25 billion of cathodes a year. Redwood plans to build a similar operation in Europe by 2023.
“These numbers sound insane, but when you look at what the market needs, I’m like holy cow — is this even aggressive enough?” Straubel says. “Somebody’s got to do this. In fact, we need at least four companies doing similarly aggressive, crazy things all in the same timeline.”
Electric vehicles make up just 4 percent of passenger vehicle sales today, but the big flip is coming. At least 15 countries and 31 cities have announced timelines to entirely phase out sales of internal combustion vehicles, beginning with Norway in 2025. Last month, U.S. president Joe Biden signed an executive order targeting half of U.S. auto sales to be electric by 2030. General Motors, the biggest U.S. automaker, has pledged to electrify all of its vehicles by 2035.
These EV promises are predicated on the economic force of falling battery prices. Every time the global supply of batteries doubles, the price of making them drops about 18 percent, according to data tracked by BloombergNEF. It’s a learning curve driven by large investments in battery manufacturing like Tesla’s battery Gigafactory in Nevada. There’s one glaring exception to this rule: battery materials.
China accounts for more than 80 percent of global production of battery components and materials, BNEF data show. While planned new battery factories in the U.S. and Europe will help challenge Asia’s dominant role, they’ll remain dependent on the region without huge new investments in basic battery components.
