Redwood Materials, Tesla co-founder JB Straubel’s battery recycling company, is adding more big names to its growing roster of partners. The company said Tuesday that Volkswagen and Audi have agreed to join its electric vehicle battery materials program, part of an effort to create a closed-loop supply chain that can make electric vehicles more sustainable.
The Carson City, Nevada-based company will work directly with more than 1,000 VW and Audi dealerships in the U.S. to collect and ship used EV batteries to its facilities for recycling. Redwood estimates it can recover over 95% of the high-value metals in those lithium-ion packs, including nickel, cobalt, lithium, and copper. Those materials will then be used for new battery anodes and cathodes that Redwood said it will supply to U.S.-based battery manufacturers.
The global surge in demand for lithium-ion batteries to power electric cars and trucks is stressing the supply chain for internationally sourced commodity minerals like lithium, nickel, and cobalt, all of which are trading at or near record-high levels. Currently, lithium costs nearly $75,000 a ton, according to Trading Economics, while nickel runs about $22,000 per ton. Redwood believes large-scale battery recycling infrastructure is the best way to manage tight supplies.
“As more and more batteries reach end-of-life each year, an increasing and infinitely recyclable resource becomes available,” Redwood CEO Straubel, who was previously Tesla’s CTO.
Backed by the likes of Ford and Amazon, Redwood has raised more than $800 million in the last two years, boosting its valuation to $3.8 billion, according to Pitchbook. The company is expanding its Nevada facilities to process an estimated 6 gigawatt-hours of batteries this year, enough to supply packs for more than 60,000 electric vehicles. It also plans to build a $1 billion plant to make cathode and anode material for electric car batteries starting in 2025.
The new partnership with Volkswagen and Audi doesn’t include direct investment in Redwood, according to company spokeswoman Alexis Georgeson, the companies are already sending battery packs to the privately held startup. She declined to share revenue details of the business relationship.
The Volkswagen Group of America estimates that 55% of its U.S. sales will be electric vehicles by 2030. “This collaboration allows us to move closer toward our goal of closing the loop for a circular EV economy, giving American consumers yet another reason to go electric,” said Scott Keogh, president and CEO of the regional auto unit.
For Redwood, 2022 has been a boom year for partnerships. Earlier this summer the company announced a battery recycling alliance with Toyota, following partnerships with Ford, Volvo Cars, electric truck and busmaker Proterra, and bicycle maker Specialized. It’s also working with California to recover used batteries, and inked agreements with Amazon, Panasonic, and recycler ERI, which claims to be North America’s largest electronics consolidator.
In 2021, Redwood raised $775 million in a funding round that drew investment from companies including Ford, Fidelity, Bill Gates’s Breakthrough Energy Ventures, and Amazon’s Climate Pledge Fund.
Closely held Redwood hasn’t shared any revenue details yet, though Straubel said in 2021 that its proprietary recycling technology already allows it to recover and resell commodity metals and materials at a “cost-competitive” price level.
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