Redwood Materials Secures $700M for Battery Recycling Expansion

Redwood Materials Secures $700 Million to Expand Battery Recycling Operations

JB Straubel, CEO of Redwood Materials, previously articulated a vision to establish his company, founded in 2017, as a leading global battery recycling entity. Now, the former Tesla co-founder and Chief Technology Officer possesses the financial resources to expedite these ambitions.

Significant Investment Round

Redwood Materials announced on Wednesday the successful completion of a $700 million funding round. This capital infusion comes from prominent institutional investors and venture capital firms.

The Series C funding was spearheaded by funds and accounts managed by T. Rowe Price Associates. Key participants included Goldman Sachs Asset Management, Baillie Gifford, the Canada Pension Plan Investment Board, and Fidelity.

Continued Investor Confidence

Existing investors demonstrated continued faith in Redwood’s mission. Capricorn’s Technology Impact Fund, Bill Gates’ Breakthrough Energy Ventures, and Amazon’s Climate Pledge Fund all reinvested in the company.

Valor Equity Partners, Emerson Collective, and Franklin Templeton also contributed to this funding round.

Total Funding and Valuation

Having previously secured $40 million in Series B funding and seed capital, Redwood Materials’ total funding now approaches $800 million.

Sources indicate the company’s post-funding valuation has reached $3.7 billion, though Redwood Materials has not officially confirmed this figure.

Building a Circular Battery Supply Chain

The Importance of a Closed-Loop System

Redwood Materials is dedicated to establishing a circular supply chain for battery materials. Straubel emphasizes that this closed-loop system is crucial for battery cell manufacturers to secure the necessary supply for both consumer electronics and the burgeoning electric vehicle market.

Recycling Processes and Material Recovery

The company currently recycles scrap generated during battery cell production, as well as end-of-life consumer electronics. This includes items like cell phone batteries, laptops, power tools, scooters, and electric bicycles.

Through its processes, Redwood extracts valuable materials – including cobalt, nickel, and lithium – that are traditionally sourced through mining. These recovered materials are then supplied to customers such as Panasonic at the Gigafactory Nevada (operated in partnership with Tesla) and Envision AESC’s battery plant in Tennessee.

Strategic Partnerships

Redwood has also forged a partnership with Amazon to facilitate the recycling of EV batteries, lithium-ion batteries, and electronic waste from various Amazon operations.

Addressing a Growing Need

Joe Fath, a portfolio manager at T. Rowe Price Growth Stock Fund, stated that the demand for these materials will increase dramatically with the ongoing transition to de-carbonization. He believes Redwood is uniquely positioned to address this critical challenge.

Supply Chain Bottlenecks and Automotive Industry Impact

Potential Material Shortages

Straubel foresees potential bottlenecks in the supply chain as demand for critical materials intensifies. This could impede the growth plans of automakers like Ford, GM, and Volkswagen, all of whom have committed to significant electrification initiatives.

Increased Electrification Efforts

The situation is expected to become more acute as more automotive manufacturers embrace electric vehicle production. Mercedes-Benz, for example, recently announced a €40 billion ($47 billion) investment to become an all-electric automaker by the end of the decade.

Mercedes-Benz estimates it will require over 200 gigawatt-hours of battery capacity and plans to establish eight battery factories, including collaborations with existing and new partners.

Scaling Up Operations

Straubel asserts that now is the time for Redwood Materials to accelerate its scaling efforts.

Expansion Plans and Job Creation

Land Acquisition and Facility Expansion

Prior to securing the $700 million investment, Redwood had already begun expanding its infrastructure. In June, the company purchased 100 acres of land near the Panasonic-Tesla Gigafactory in Sparks, Nevada, and has initiated operations at the site.

Furthermore, Redwood is currently expanding its existing 150,000-square-foot facility in Carson City, Nevada, by an additional 400,000 square feet. This expansion is slated for completion by the end of the year.

Workforce Growth

To support its growth trajectory, Redwood plans to add over 500 employees over the next two years. The company currently employs more than 130 individuals.

Consumer Recycling Program

Redwood has also launched a program enabling consumers to mail in personal electronics, such as smartphones, for recycling.

Strategic Focus

Straubel clarified that while the new equity will aid in completing ongoing projects, its primary purpose is to facilitate broader strategic initiatives.

Future Market Expansion

The company is actively evaluating potential locations in North America and exploring opportunities to enter the European market, though a specific timeline has not been established. Asia is identified as the third target market for future expansion.

Investing in Recycling Technology

Redwood is also allocating funds to large-scale projects aimed at enhancing its recycling processes, particularly in the areas of material purification and optimizing the return of raw materials to the battery supply chain.