Tesla Cofounder Aims To Rev Up U.S. EV Battery Market With $3.5 Billion South Carolina Plant

Redwood Materials, the battery recycling and components maker created and run by Tesla cofounder JB Straubel, is accelerating its push to build a U.S. supply base for critical components for electric vehicle batteries with plans for a massive $3.5 billion plant in South Carolina.

The Carson City, Nevada-based company, which last month said it would supply lithium-ion cathodes to Panasonic from a $1.1 billion plant under construction in its home state, is acquiring 600 acres in Camp Hall, an industrial park near Charleston, for an East Coast complex that will eventually employ 1,500 people. The “closed-loop” facility will recycle and recover high-value metals from used batteries and turn them into cathode and anode materials needed by new battery plants that are popping up across the Southeast and Midwest. It’s the biggest such announcement for this type of facility in the U.S., with construction slated to start in early 2023 and recycling operations to begin by year’s end. When ramped up, it will produce 100-gigawatt hours of anodes and cathodes, or enough for a million electric vehicles a year, Straubel told Forbes.

“There’s a giant wave of battery manufacturing heading toward the U.S. because of the (Inflation Reduction Act), so having a footprint for us that’s more geographically spread across the U.S. is super helpful,” he said. “They’re expanding, especially in the Southeast, creating this so-called battery belt between Michigan and Georgia. That’s part of the calculus for us on why we want to develop a footprint right in the middle of the region to support that.”

Auto and battery makers, including General Motors, Ford, Hyundai, Toyota, BMW, Volvo, Panasonic, SK Battery and Envision AESC, have committed tens of billions of dollars cumulatively for new plants to make battery packs for dozens of EV models coming to market. But now, nearly all of those factories will initially have to source anodes and cathodes—the components that release and capture electrons within a battery cell—from suppliers in China, South Korea and Japan. The recently enacted IRA, however, is pushing automakers to use batteries that include ever higher amounts of content sourced from North American suppliers, creating a big opportunity for Redwood and its competitors.

“There’s a giant wave of battery manufacturing heading toward the U.S.”

“The Inflation Reduction Act really sets a pretty clear imperative for almost everyone building batteries and EVs in the United States to find a domestic supply chain, so it’s an exciting time,” Straubel said.

Redwood has raised more than $1 billion from investors, including Ford, Fidelity, Bill Gates’ Breakthrough Energy Ventures and Amazon’s Climate Pledge Fund. It will be seeking additional funds to cover the $4.6 billion it is committing for both the South Carolina campus and its production facilities in Nevada, though Straubel declined to provide details about that effort. A source close to the deal said Redwood Materials could receive incentives from South Carolina and local governments worth about $900 million if it fulfills all its long-term investment plans for the Camp Hall site.

The company could also apply for a low-cost loan as part of the Department of Energy’s Advanced Technology Vehicle Manufacturing Program, though it hasn’t done so yet. This week the DoE said GM and battery partner LG Energy Solutions qualified for a $2.5 billion loan that will help pay for three cell manufacturing facilities they’re building in Ohio, Tennessee and Michigan.

Tesla received an ATVM loan that it used to buy and equip its first plant, a former Toyota-GM factory in Fremont, California, in 2010. Straubel joined the EV company in 2004 with Elon Musk, serving as its CTO until he left to start Redwood in 2019.

Straubel declined to say which auto and battery companies will be buyers of the anode and cathode materials it will make in South Carolina, saying new partnerships would be announced later. The appeal of the Charleston region, in addition to being close to many new battery plants, is its access to the city’s port, rail and trucking network.

Tight global supplies of mined metals needed to make batteries, including lithium, cobalt, copper and nickel, inspired Straubel to cofound Redwood with an initial focus on recycling spent batteries. Now the goal is to create a closed-loop production operation and use both recovered and commodity metals in the anodes and cathodes Redwood makes. The company also plans to power the South Carolina plant solely using renewable energy. By doing so, it expects to cut the carbon emissions of making battery components by up to 80% compared to the current Asia-based supply chain, Redwood said.

And between its Nevada and South Carolina projects, no company has yet announced bigger plans to make anodes and cathodes in the U.S.

“From what I can see, we are the leader and are further ahead, but I’m confident that we’re going to see more and more announcements,” Straubel said. “Ultimately, the supply chain needs to be closely balanced. For every 100 gigawatt-hours of cell manufacturing that gets announced somewhere, someone needs to do the supply chain locally as well. Right now, we’re still way out of balance.”