Redwood Materials plans massive $3.5B EV battery materials plant in S.C.

Redwood Materials plans to invest $3.5 billion to build a battery materials plant in South Carolina.

The factory at Camp Hall commerce park in Ridgeville, S.C., will conduct recycling, refining and remanufacturing operations to capture and produce battery materials. The company said Wednesday the plant would create about 1,500 jobs.

The plant, near Charleston, will be Redwood's second major facility. It is already recycling material at what it expects will be a more than $1.1 billion plant under construction in phases near Reno, Nev.

Both campuses are part of the Carson City, Nev., company's business strategy to take end-of-life batteries from automakers and the electronics industry and break them down to the cobalt, copper, graphite, lithium and nickel content.

Those elements make up the negatively charged anode and positively charged cathode portions of a battery that conduct electrons in and out of the cell and make up the industry's most significant battery materials cost.

Over time, the plant will ramp up to produce 100 gigawatt-hours of cathode and anode material a year. Redwood said that's enough to equip more than 1 million electric vehicles annually. Between all of its facilities, Redwood aims to produce enough anode and cathode to equip 5 million EVs annually by 2030.

Redwood wants to become a U.S. source to fill a role now satisfied by foreign suppliers. That would lower the cost and reduce the carbon footprint of battery production, Redwood spokeswoman Alexis Georgeson said. In November, Redwood said it signed a deal to provide cathode material, a key component of lithium ion batteries, for a giant factory Panasonic Energy Co. is building in Kansas.

Redwood's aggressive building plans come as automakers are speeding a transition to EVs, eventually requiring tens of millions of battery packs and massive amounts of battery materials. Redwood projects lithium ion demand to grow by more than 500 percent by 2030.

The Biden administration has targeted having zero-emission vehicles make up half of all new U.S. vehicle sales by 2030. At the same time, the Inflation Reduction Act has changed federal sales incentive eligibility to favor vehicles with batteries made in North America. Moreover, the critical minerals used in the batteries need to be extracted or processed in the U.S., from free-trade partner nations or materials recycled in North America.

Industry executives say production bottlenecks for batteries and materials threaten to delay the sales goal.

That's created a battery factory building spree. Since the start of 2021, automakers and battery suppliers have announced more than 15 new facilities or expansions, representing a potential investment of at least $40 billion, according to an October report from the Federal Reserve Bank of Dallas.

Combined, the battery factories announced and under construction in the U.S. would need to spend an estimated $150 billion overseas to obtain anode and cathode materials between now and 2030 based on projected demand, Georgeson said.

There are also significant geopolitical risks with foreign suppliers. Battery-grade cobalt, for example, comes from just 18 mines, with the majority of the supply originating in the Democratic Republic of Congo, according to Graham Evans of S&P Global Mobility.

In an October S&P report, Evans noted the United Nations flagged Congo's deteriorating security situation "as well as child-labor practices and the ongoing guerrilla campaign being waged over the exploitation of resources and food security."

Additionally, China controls more than half of battery-grade metals refining capacity across all essential materials, according to BloombergNEF.

The industry must develop a system for recycling material if it has any chance of satisfying ambitious plans by automakers and regulators to transition to EVs, said Alexei Andreev, managing partner of Autotech Ventures, a venture capital firm that focuses on transportation technology.

Ore from mines has concentrations of just 1 to 2 percent of the needed elements, he said.

"Once you extract the material, it is metallurgical grade but still not pure enough. The nickel, for example, can make a shiny bathroom faucet but isn't good enough for electrochemistry," Andreev said.

That requires even more processing.

But the materials Redwood is culling from spent batteries are ideal for recycling. Battery cells contain the needed elements in very high concentrations and are already processed.

"It makes everything easier," Andreev said.

The process, however, is still complex. EV battery cells are hard to collect and disassemble. They can catch fire, and they require special handling, he said.

Redwood said it would break ground on the Camp Hall campus early next year. It plans to run its first recycling process by the end of 2023. It will add to the site in phases, adding functions such as component manufacturing and scale.

The Carolina Battery Materials Campus will "support our current and future customers in the heart of America's battery belt," said JB Straubel, Redwood's founder and CEO.

Straubel previously was Tesla's chief technical officer. He founded Redwood Materials in 2017.

The company said the campus would be fossil-free, relying only on renewable energy.

Not all of the production will be tied to recycling, Georgeson said. There isn't enough material to go around. The plant is near the Port of Charleston, and that gives Redwood the ability to import raw materials and potentially export components in the future.

Redwood also said partners including Toyota, Volvo, Panasonic and Envision AESC already have a presence in the region.

Redwood will receive local and state economic development incentives to help fund the plant, Georgeson said, but the details will be announced later.

"This historic investment in Berkeley County will offer unique career opportunities for our citizens and region. Redwood Materials' investment will also allow for significant investments in road infrastructure, schools and public safety, improving the overall quality of life for our residents," said Johnny Cribb, Berkeley County supervisor.