Figure: Redwood Materials
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The Department of Energy has agreed to loan a Nevada startup $2 billion to support its production of critical battery materials, a staggering amount that illustrates the Biden administration’s determination to domesticate the electric vehicle supply chain.
Redwood Materials will use the money to build its first U.S. factory to make anode copper foil and cathode active materials, two essential components in EV batteries. Founded by former Tesla executive JB Straubel, the company says it will make enough to support the production of 1 million electric vehicles a year by 2025. That would reduce the country’s gasoline consumption by more than 395 million gallons annually and reduce carbon dioxide emissions by more than 3.5 million tons. It would also reduce automakers’ reliance on foreign-made battery components.
“It achieves goals of reducing reliance on critical minerals from Asia, shifting manufacturing and supply chain to the U.S., and producing components for electric vehicles, ultimately reducing greenhouse gas emissions,” said Bob Marcum, DOE Loan Programs Office chief operating officer, Grist said on Friday. “It’s a very important project that we’re really looking forward to.”
The loan, which the Department of Energy approved in a conditional commitment announced Thursday, comes from the Advanced Technology Vehicle Manufacturing Loan Program, which supports manufacturing projects that improve the fuel efficiency of vehicles.
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The Biden administration wants electric vehicles to account for half of all new car sales by 2030. The main components of electric vehicle batteries are almost exclusively produced in Asia. “We have some catching up to do,” Secretary of Energy Jennifer Granholm said Thursday at an event at Redwood Materials’ Nevada facility. “China has dominated every step of the supply chain.” This poses security risks in the supply chain, drives up the cost of batteries and creates greenhouse gas emissions from moving materials around the world.
“When we realized how vital this technology had become to our entire transportation system and grid, all eyes turned to how we could build independence,” said Nathan Iyer, senior associate at clean energy nonprofit RMI.
The bipartisan Infrastructure Act, the CHIPS & Science Act and the Inflation Reduction Act are pouring more than $135 billion into the country’s transition to electric vehicles, including sourcing and processing of critical minerals and battery manufacturing.
“They basically targeted every single part of the manufacturing process,” Iyer said. “What the US is doing is unique, strategic and aggressive.”
Redwood Materials was founded in 2017 by JB Straubel, co-founder and former CTO of Tesla. While working on Tesla’s massive battery Gigafactory in Nevada, he realized that the US would soon face a major challenge in sourcing the supplies needed to transition to electric vehicles. “It was already clear eight years ago that this was going to be a really big bottleneck for the entire industry as it scaled,” he said Thursday.
Redwood Materials will produce the two most important components of an electric vehicle battery: the anode, which contributes to the battery’s charging performance, and the cathode, which contains the battery’s critical metals. Together they account for almost 80 percent of the cost of a battery. Domesticating their production not only provides a safer supply stream for the materials, but also lowers the cost of battery production, which can make EVs more affordable for consumers.
Last month, Redwood Materials began producing anode copper foil at its Nevada facility, the first time the component has been commercially manufactured in the United States. It expects to begin testing its cathode products later this year.
Upon completion, the Nevada facility will employ approximately 1,600 full-time employees.
The company brings circularity to the battery supply chain. The metals in EV batteries have near-infinite recyclability, and Redwood Materials has begun to recycle them electrically, salvaging scrap from factories, lithium-ion batteries from e-bikes, consumer electronics, and other sources for use in its anode and cathode components collect.
While there aren’t enough electric vehicle batteries in circulation yet to use materials exclusively from recycled sources, the infrastructure Redwood Materials is now creating could eventually support an almost entirely closed battery manufacturing.
“They are a little ahead of recycled material inputs,” Iyer said, “but if they succeed, that will be the cornerstone of the circular economy.”
According to Minister Granholm, 80 battery manufacturers or supply chain companies have announced they either have or are opening new locations in the United States in the past two years. “This is happening because there is now an industrial strategy to make this stuff in America,” she said. “China could start to worry.”
This article originally appeared in Grist at https://grist.org/energy/tesla-co-founders-startup-gets-2-billion-to-boost-ev-battery-production/. Grist is a non-profit, independent media organization dedicated to telling stories about climate solutions and a just future. Learn more at Grist.org