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Redwood Material, 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 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.)
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.
Not-just-recycling company
“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.”
Straubel left Tesla, in part, because of his growing alarm over a looming choke point in the global supply chain. Car companies were finally paying attention to battery manufacturing, he said, but were less interested in the “less sexy” components that go into them.
The company’s target of 100 GWh in 2025 means it can no longer rely on recycled materials alone. Unlike some consumer electronics, there’s a long lag between when electric cars are made and when their batteries are ready to be recycled.
In the decades to come, Straubel is confident that recycled materials will be used for “close to 100 percent” of the world’s battery production. Recycling is already profitable, he said, and eventually companies that don’t integrate recycling with refining and production won’t be able to compete on cost. Challengers are equally confident in the outlook, including Worcester, Massachusetts-based Battery Resourcers Inc., Canada startup Li-Cycle Holdings Corp. and industry incumbents like China’s GEM Co.
Redwood moving into cathode production is a major development for the EV industry, according to BNEF analyst James Frith. Not only is the cathode the biggest driver of costs, but it’s the most polluting part of battery production. Consolidating the supply chain in the U.S. — and the technological improvements that will come with it — will dramatically reduce emissions from battery production.
“If you’re getting rid of that long supply chain, and you’re not having to do as much virgin refining, you’re cutting a huge chunk out of those emissions,” Frith said.
Urban mining
While companies wait for the first big wave of electric vehicles to reach retirement, consumer electronics provide a surprisingly effective substitute. For example, batteries from consumer electronics contain considerably higher levels of cobalt, one of the most expensive and controversial inputs for batteries. It would take 6,147 recycled iPhone batteries to provide enough lithium for a Tesla Model Y but just 166 iPhones to provide enough cobalt, according to BNEF calculations. Straubel says there’s so much cobalt in old electronics, Redwood will always produce more from recycling than it needs for manufacturing.
When anyone drops off an old mobile phone or laptop at a Best Buy recycling center, it goes to Redwood. So does any scrap when Panasonic makes battery cells for Tesla at the Nevada Gigafactory. Since Straubel left Tesla, Redwood has taken over more than half of the U.S. market for lithiumion battery recycling. It struck battery-waste deals with Amazon.com Inc., electric bus maker Proterra Inc., Specialized Bicycle Components Inc. and, importantly, an exclusive deal with the largest electronics consolidator in North America, Electronics Recycling Services (ERI).
After collection, Redwood disassembles, shreds, burns, and mixes materials in a slurry to separate out the valuable nickel, lithium, cobalt and copper. More than 95 percent of the core battery materials are recycled, according to Redwood. The resulting powders then wind their way back through the supply chain.
Straubel was the mastermind behind Tesla’s battery strategy from the first time
Elon Musk approached him, following an engineering talk at Stanford University in 2003. When Straubel left Tesla, he brought along Kevin Kassekert, another key confidant of Musk, as chief operating officer of the new company. Kassekert was in charge of building Tesla’s sprawling battery “Gigafactory” in Sparks, Nevada.
Now, he aims to do the same thing for battery materials at Redwood.