Redwood Materials, a battery recycling startup co-founded by JB Straubel, a former Tesla executive, has announced a partnership with Ultium Cells, a joint venture between General Motors (GM) and LG Energy Solution. The collaboration aims to recycle production scrap from both GM’s Warren, Ohio and Spring Hill, Tennessee facilities. This move highlights the growing importance of battery recycling in the automotive industry as companies seek to secure their battery material supply chain.
One of the main reasons behind the push for battery recycling is the desire to reduce reliance on China, which currently dominates the global battery material market. Incentives for domestically produced and recycled critical battery materials, such as lithium, nickel, cobalt, manganese, and graphite, are increasing in the United States and Europe. President Joe Biden’s Inflation Reduction Act, which was signed in August 2022, includes a tax credit for battery manufacturing and critical mineral processing. Redwood Materials benefited from this bill when it received a $2 billion loan from the Department of Energy (DOE) to build its battery recycling facility in Nevada. Ultium Cells also received a $2.5 billion loan from the DOE for its cell manufacturing facilities in the US.
Although the recycling of electric vehicle (EV) batteries is a long-term endeavor due to the long lifespan of these batteries, deals like the one between Redwood Materials and Ultium Cells play a vital role. Recycling scrap from battery production facilities is crucial for managing waste and establishing a sustainable supply chain for battery materials. Redwood Materials, already known for its partnerships with Toyota and Panasonic (which produces batteries for Tesla), is positioning itself as a key player in the EV battery recycling space.
Managing scrap production is no small task. On average, a battery factory generates 5% to 10% in scrap, amounting to approximately 10,000 tons of material annually for Redwood Materials. This translates to daily truckloads of scrap that need to be processed and recycled efficiently. Redwood Materials will recycle Ultium Cells’ scrap and transform it into high-quality battery materials, which will then be supplied back to cell manufacturers as domestically produced anode and cathode components.
In addition to recycling, Redwood Materials is focused on processing materials as part of its long-term strategy. The price of battery materials fluctuates regularly, and by processing them domestically rather than sending them to Asia for processing, Redwood Materials aims to capture more value. Processing materials within the US could reduce costs and establish a more sustainable supply chain.
To support its expansion plans, Redwood Materials raised $1 billion in August 2023. The company aims to increase its production capacity for anode copper foil and cathode active materials. By 2025, Redwood Materials expects to produce around 100 gigawatt-hours of cathode active materials and anode foil, capable of powering 1 million EVs. By 2030, the company envisions scaling its production output to 500 GWh per year, which could power 5 million EVs. However, it is unclear whether this timeline is still accurate.
Ultium Cells, on the other hand, operates two facilities that are expected to produce more than 80 GWh of battery cells annually. Redwood Materials will receive the majority of the scrap generated by these facilities. In addition, Ultium Cells has a partnership with Canadian battery recycling firm Li-Cycle for recycling scrap, although it is unclear if that agreement is still ongoing. Ultium Cells is also constructing a third facility in Michigan, but it is unknown if Redwood Materials will receive scrap from that factory as well.
Overall, Redwood Materials’ partnership with Ultium Cells aligns with the growing emphasis on sustainable battery production and recycling in the automotive industry. As electric vehicles become more common, establishing a reliable and environmentally friendly supply chain for battery materials is crucial. Redwood Materials’ expertise in battery recycling and processing positions the company as a key player in this emerging industry.
