Redwood Materials, the battery recycling and components maker created by Tesla cofounder JB Straubel, said it will supply Toyota with anode and cathode materials to make new batteries at a massive U.S. plant the carmaker is building, the startup’s first such deal with an automaker.
The “long-term” contract for Toyota to buy cathode active material and anode copper foil from Redwood expands a relationship between the two that began last year with the Carson City, Nevada-based company recycling old hybrid and electric vehicle batteries from Toyota models. Financial terms of the new supply deal aren’t being disclosed, but it’s “significant and important for us,” Straubel told Forbes.
“It’s our first end-to-end (automaker) supply agreement,” he said. “And the most interesting, newest part of this is it’s the first time as far as we’re aware that a major (automaker) has gone all the way from recycling back to component procurement.”
The world’s biggest automaker has been noticeably less aggressive in introducing new EV models than many of its competitors, arguing that hybrids like the Prius and plug-in hybrids are a more affordable option for curbing automotive carbon emissions. That’s changing, however, as the company is investing nearly $14 billion in a massive factory in North Carolina to make battery packs for both EVs and plug-in hybrids starting in 2025.
Though Toyota is likely to become a major commercial partner of Redwood’s, it’s not one of its investors, the company said.
Straubel, who began developing battery packs and motors for Teslas nearly two decades ago, created Redwood to keep high-value raw materials used to make EV batteries, like lithium, cobalt and nickel, out of landfills by reusing them. He also intends to help create a U.S. supply base for new battery cathodes and anodes, the most expensive part of lithium-ion cells, which are currently produced almost entirely in Asia, particularly China.
“Accelerating our recycling efforts and domestic component procurement gets us closer to our ultimate goal of creating a closed-loop battery ecosystem that will become increasingly important as we add more vehicles with batteries to roads across North America,” Christopher Yang, Toyota North America’s group vice president, said in an emailed statement.
Closely held Redwood, which Straubel said will have “tens of millions of dollars” of revenue in 2023, previously announced plans to supply battery materials to Panasonic. It’s raised about $2 billion and secured a $2 billion federal loan to expand recycling and component manufacturing at its Nevada plant and a new facility under construction near Charleston, South Carolina.
Redwood said it plans to use at least 20% recycled nickel, 20% recycled lithium and 50% recycled cobalt in the cathodes it will make for Toyota. Its anode copper foil for the carmarker will be 100% recycled copper.
Straubel has history with Toyota, notably working on a jointly developed electric RAV4 using Tesla batteries and motors that was marketed about a decade ago. Toyota also played a game-changing role in Tesla’s early days, essentially giving it a shuttered factory in Fremont, California, in 2010 (selling the plant to it for just $50 million and then reinvesting $50 million back into Tesla). That allowed the EV startup to get its Model S sedan into production in 2012.
That wasn’t necessarily helpful in shaping the new deal, but “it doesn’t hurt anything either,” Straubel said. “A lot of the world has changed since 2010, especially related to EVs. It feels like it could have been 50 years ago! Some of the same people, amazingly, are still involved.”
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