JB Straubel sits down with CNBC’s Phil Lebo at Redwood Materials.
Redwood Materials has secured a $2 billion loan commitment from the Department of Energy, the agency announced Thursday through its Office of Loan Programs.
The battery recycling startup will use the funding to build and expand a battery recycling plant outside Reno, Nevada. The company takes in used electric vehicle batteries and automotive scrap, processes them and produces raw materials and products used to make new electric vehicle battery cells, namely anode copper foil and cathodic active materials.
Redwood Materials was founded by former Tesla CTO and co-founder of JB Straubel in 2017 while working at Elon Musk’s car company.
In 2019, Straubel left Tesla to run Redwood Materials full-time, and several former Tesla employees joined him, including COO Kevin Kasekert, who previously served as vice president of people and places at Tesla.
As CNBC previously reported, Redwood Materials struck a multibillion-dollar deal with Tesla supplier Panasonic last year.
“These are very capital-intensive projects, and we’re competing with Asia to ramp them up and bring those supply chains and manufacturing operations back to the U.S.,” Straubel said Thursday on CNBC’s The Exchange.
He added: “Demand for batteries in the US and demand for electric vehicles is growing … but we still have a long way to go before that supply chain predominantly moves to the US.”
Jigar Shah, Director of the Department of Energy’s Loan Programs Division, wrote in the announcement of the new loan commitment:
“To meet the needs of the rapidly growing electric vehicle market, the United States will need to expand its battery recycling capabilities as well as increase our domestic capacity to produce battery precursor materials. By reducing the cost of important materials for lithium-ion batteries and batteries using recycled materials, electric vehicles can become more affordable for low-income populations.”
In order to reduce greenhouse gas emissions over the next decade, President Joe Biden pushed for and signed the $430 billion Inflation Reduction Act (IRA) in August 2022. The new DOE Redwood Materials loan stems in part from that law, which has so far been announced to create more than 100,000 new green jobs.
The Department of Energy says it has committed $55 billion in new assessment loans for its Advanced Technology Vehicles program through the IRA. This same program once helped Tesla get started—and Tesla paid off their loan early and turned into a powerhouse, in stark contrast to failed clean tech companies like Solyndra, for example.
Redwood Materials has already started a pilot line for the production of anodic copper foil in Nevada. It aims to support the production of more than 1 million electric vehicles a year, which could help drivers avoid around 3.5 million tonnes of CO2 and other tailpipe emissions each year, according to a statement from the Department of Energy.
While Tesla may have been the birthplace of Redwood Materials and the company’s partner today, it may eventually compete with the recyclers in technology. In its 2022 annual financial filing with the SEC, Tesla said, “We have agreements with third-party battery recycling companies to recycle our batteries, and we are also piloting our own recycling technology.”