As EV prospects ramp up, Tesla veteran JB Straubel tears batteries down

Editor's note: This story has been updated to add more context about the materials from cell phones which could make a battery for an EV.

CARSON CITY, Nev. — JB Straubel has spent the better part of two decades advancing a new era of electrified transportation, which could thwart the environmental consequences of climate change.

His work took on renewed importance this summer. The threat was evident right outside his office window.

"It was pretty brutal out here," he said. "There were months of the year where it was just complete, apocalyptic smoke."

Wildfires engulfed the Lake Tahoe region, scorching thousands of acres of pristine forests, some not more than a dozen or so miles from Carson City, where Straubel's new battery recycling startup, Redwood Materials, is based.

The flames were finally extinguished in October, but charred stumps and thank-you signs for firefighters remain powerful reminders of how an onslaught of wildfires in particular, and extreme weather overall, could reshape the drought-stricken West.

For Straubel, a co-founder and longtime chief technology officer at Tesla Inc. and now CEO of Redwood Materials, the wildfires underscore the pressing need for countermeasures.

"We're going to head into the next decade or two with unbelievably amazing pressure to change everything faster than we expect," he said. "That's part of why I'm so bullish that we grow, invest and do this all as fast as humanly possible right now, faster than all the external obvious signals may seem. I just see this is going to be more urgent."

Amid that backdrop, Redwood Materials is thinking far afield. Right at the time electric vehicle sales are rising, Redwood Materials is developing ways to manage the end of life for EV batteries.

Namely, by recycling them. Straubel says the company, in some fashion, resembles a traditional recycler, saving garbage from clogging landfills and instead sorting it for reuse. But that perhaps sells the role of Redwood — and other upstarts in the embryonic battery-recycling realm — short.

Once Redwood obtains batteries found in cars, household appliances and more, the company chemically deconstructs them, perhaps akin to disassembling a completed Lego set. Then Redwood creates new products for customers such as Panasonic and automakers. One prominent new partner is Ford Motor Co., which said in September it's working with Redwood on "closing the loop," creating a circular supply chain that reduces reliance on mining and imports.

"Currently, nearly all battery manufacturers are based in China, Japan or South Korea," says Asad Hussain, senior mobility analyst at financial analytics firm PitchBook, which estimates the global recycling market will grow from $2 billion today to $27.3 billion by 2030. "The global EV industry is already overexposed to foreign supply chain issues. ... Over the long term, we see a large opportunity in recycling end-of-life EV batteries."

Batteries made from recycled materials offer a series of benefits at the crossroads of energy and transportation. They diminish the need for freshly mined raw materials, reducing pollution. They help anchor domestic battery supply chains at a time when logistics are fraught with both labor and geopolitical complications. Most of all, they help meet mushrooming demand.

President Joe Biden set a goal of ensuring half of all new vehicles sold in the U.S. by 2030 have no emissions. While that once seemed improbable, EV sales are booming. Electrified vehicles of all stripes, including hybrids and full battery-electrics, reached 10 percent of the overall automotive market at the end of the third quarter, according to Cox Automotive. Increased demand is both promising and daunting.

"It's gone from 'Will it happen?' to everyone suddenly dropping that and going, 'OK, it's going to happen,' " Straubel said. "There's this rush to really be first movers and make large announcements. I do feel like we've kind of flipped almost a little too far the other way. Now the big announcements are coming faster than reality may keep up."

The gap between demand and reality is a growing concern. Meeting zero-emission transportation goals codified last month at the United Nations Climate Change Conference would require 17 times more lithium production by 2040 than the current output, according to an analysis by Benchmark Mineral Intelligence.

"Right now, lithium demand is growing at three times the speed of lithium supply," warned Simon Moores, CEO of Benchmark. "That's a big problem that needs to be solved."

Reaching the UN conference goals would further require more than 5 million tons of nickel sulphate production, about 19 times more than current annual output, according to the EV supply chain consulting firm.

Straubel foresaw that problem looming while he served as chief technology officer at Tesla, where he developed much of the automaker's core battery technology and shepherded the Gigafactory outside Sparks, Nev., into existence. He founded Redwood Materials as a prospective solution in 2017, locating the company in Carson City not only for its proximity to the Gigafactory, but to capitalize on Nevada's mining history and a work force experienced in metallurgy. Straubel left Tesla in 2019 to focus on recycling full time.

Since then, he's come to believe the answer to solving those specific materials shortages and others like them lies, at least in part, in mining the junk drawers of America. Beyond discarded EV batteries and scraps from production, Redwood is collecting electric toothbrushes, power tools and laptops. Vacuum cleaners and cellphones too.

"You can make a whole new EV battery out of something on the order of 150 to 160 cellphone batteries," he said about the cobalt extracted from those batteries.

Awaiting deconstruction, battery-powered products of every sort are piled in boxes that stretch halfway to the ceiling in a warehouse at Redwood's headquarters that's roughly the size of a football field. Some of them arrive via partnerships with the likes of Amazon and Panasonic, for which Redwood is also providing recycled battery materials, and AESC, which makes the batteries for the Nissan Leaf.

Others come from electric bus manufacturer Proterra and Specialized Bicycle Components Inc., a prominent e-bike manufacturer. Sometimes ordinary citizens simply mail in their old devices.

"People don't know what to do with this stuff, and even if they do have some idea, it's not easy for them to do it," Straubel said. "If it's an iPhone, I guess you could take it to Apple. But if it's your lawn mower battery, what do you do with that thing?"

Most people would throw it away. Roughly 90 percent of batteries wind up in landfills, according to Redwood, a waste underscored by the realization the mountainous heaps of junk the company has collected represent only a microscopic sliver of the prospective market.

Investors are better understanding the challenges and opportunities. In July, Redwood Materials received $700 million in funding from T. Rowe Price, Fidelity and others. That's helping to fund expansion plans into more buildings in Carson City, a 100-acre facility in Sparks and a to-be-determined new location somewhere else in North America, likely in the Eastern U.S., all at a time when time is of the essence.

"We're getting closer to having a pretty big tidal wave of materials, and it's a risk for people to just think that we'll solve that when the time comes," Straubel said.

By 2030, he expects Redwood's production output to reach 500 gigawatt-hours per year of cathode materials, enough to power 5 million EVs. That's a mammoth figure, yet one that's perhaps not enough. In many ways, that disconnect parallels those he encountered in building the Gigafactory, where initially, plans and projections felt ambitious and perhaps optimistic for an EV world that did not yet exist.

"It was aiming at a place that seemed ridiculously too large, and when it arrived, it was barely big enough, and now feels small," Straubel said.

While Tesla's sales climb occurred over 15 years, he thinks recycling's role in spurring a circular supply chain will become more prominent in the near term, especially with governmental, industry and environmental forces aligning.

"We're moving toward sustainability a bit more rapidly, and it's moved to a scale where it's many billions of drivers and big companies driving it now," Straubel said. "But on the material side, even with all those products, it's not even remotely fully addressed. It's barely beginning."