Redwood Materials, a startup founded by former Tesla co-founder and CTO JB Straubel, has raised over $1 billion in a Series D round to expand its battery recycling and manufacturing capabilities in the US. The company aims to create a closed-loop supply chain that can produce battery materials from recycled sources and reduce dependence on imports from China.
Recycling batteries and refining materials
Redwood Materials was launched in 2017 by Straubel, who left Tesla in 2019 to focus on the new venture. The company’s core business is recycling batteries from electric vehicles, consumer electronics, and other sources, and extracting valuable metals such as lithium, nickel, and cobalt. These metals are then refined and sold to battery manufacturers, who can use them to make new batteries.
According to the company, recycling batteries can reduce the environmental impact of battery production and lower the cost of battery materials. Redwood Materials claims that it can recover 95% to 98% of the metals from batteries, compared to less than 50% from traditional mining methods. The company also says that it can reduce the carbon footprint of battery materials by up to 85%.
Redwood Materials operates a 175-acre recycling facility in Sparks, Nevada, where it processes battery scrap from Panasonic’s manufacturing plant at the Tesla gigafactory. Panasonic is also one of Redwood’s customers, along with Amazon, Envision AESC, and Rivian. The company plans to use the new funding to increase its recycling capacity and output.
Manufacturing cathode and anode foil
In addition to recycling batteries and refining materials, Redwood Materials is also expanding into manufacturing battery components. The company is building a factory in North Las Vegas that will produce cathode active materials and anode copper foil, which are essential parts of lithium-ion batteries.
The factory is expected to be operational by the end of 2023 and will have an annual capacity of 100 gigawatt-hours (GWh), enough to power 1 million EVs. By 2030, the company hopes to scale up its production to 500 GWh per year, which could power 5 million EVs.
Redwood Materials says that it will be the first company in the US to produce both cathode and anode foil domestically, which will reduce the reliance on imports from Asia. Currently, most of the battery materials are sourced or produced in China, which dominates the global market. According to Benchmark Mineral Intelligence, a price reporting agency and specialist in lithium-ion batteries for the EV supply chain, China processes and refines 59% and 75% of the world’s lithium and cobalt, respectively, compared to 3% and 3.5% for Canada and the US combined.
The US government has been pushing for more domestic production of battery materials and components, as part of its efforts to boost the EV industry and address national security concerns. President Joe Biden’s Inflation Reduction Act includes provisions to support the development of a US battery supply chain and offer incentives for EV buyers.
Attracting investors and partners
Redwood Materials’ Series D round was co-led by Goldman Sachs Asset Management, Capricorn’s Technology Impact Fund, and funds and accounts advised by T. Rowe Price Associates. New investors, including OMERS, Microsoft Climate Innovation Fund and Deepwater Asset Management, also participated in the round.
The round brings Redwood Materials’ total equity capital to $2 billion and values the company at over $5 billion. The company says that it will use the funds to continue building capacity, expanding its domestic battery supply chain, and allowing customers to buy battery materials made in the US for the first time.
The company has also secured a conditional loan commitment of up to $620 million from the US Department of Energy as part of the Advanced Technology Vehicle Manufacturing Loan Program. The milestone-based financing will be provided to Redwood Materials in tranches to support its growth and the expansion of its headquarters in Nevada.
Redwood Materials has also formed strategic partnerships with several EV makers and battery suppliers, such as Ford, BMW, LG Energy Solution, SK Innovation, Northvolt, Proterra, Lucid Motors, QuantumScape, SES Holdings, Solid Power, Enovix Corporation, Enevate Corporation, Sila Nanotechnologies Inc., Group14 Technologies Inc., Factorial Energy Inc., Cadenza Innovation Inc., Ionic Materials Inc., Nth Cycle LLC., Li-Cycle Corp., OnTo Technology LLC., Retriev Technologies Inc., Battery Resourcers LLC., American Battery Technology Company (ABTC), American Manganese Inc., Aqua Metals Inc., Comstock Mining Inc., Lithium Americas Corp., Piedmont Lithium Limited (PLL), Standard Lithium Ltd., Albemarle Corporation (ALB), Livent Corporation (LTHM), SQM S.A. (SQM), Ganfeng Lithium Co., Ltd. (002460.SZ), Tianqi Lithium Corporation (002466.SZ), and CATL (300750.SZ).
The company says that it is working with these partners to create a circular economy for batteries, where materials can be reused and recycled multiple times, reducing waste and emissions.