Redwood Materials plans to build enough components to make 1 million EV batteries a year with the loan from a US Department of Energy program.
(Bloomberg) — America’s battery supply chain is getting a jump start.
Redwood Materials Inc., created by Tesla co-founder J.B. Straubel, said on Thursday that it received a $2 billion loan commitment from the Biden administration to build enough critical battery components to produce a million electric vehicles a year.
The loan is the fourth commitment in six months from the US Department of Energy’s Advanced Technology Vehicle Manufacturing loan program — the same fund that helped Tesla Inc. develop its flagship Model S electric sedan in 2010. Biden resuscitated the program last July, after a 12-year hiatus, and Democrats nearly quadrupled its lending authority to $55 billion with their signature climate law passed in August.
It’s a big day for Redwood, which also announced it has begun production of a key product: thin copper foil used for battery anode. Redwood now operates the first major production line for the delicate foils in the US, Straubel said. Redwood will expand into complex cathode materials later this year.
“This is a super-exciting moment,” Straubel said. “It is the very tangible beginning of a US supply chain for battery materials, and we’ll be ramping that up for quite a long time to come.”
US Secretary of Energy Jennifer Granholm was scheduled to visit Redwood’s Sparks, Nevada manufacturing facility on Thursday to announce the loan, her first stop following Biden’s state of the union speech that touted the administration’s investments in clean energy.
Building a US battery belt
Every EV battery has two electrodes — a cathode and an anode — between which trillions of charged lithium atoms travel. The cathode is the biggest factor in a battery’s performance, cost and environmental footprint, and the material today is produced almost entirely in Asia. Redwood plans to make cathode precursor, a preliminary solution of refined metals, later this year, and finished cathode material beginning in 2024.
Redwood’s initial anode production will go to Panasonic’s Nevada battery factory, and the first customer for its future cathode materials will be a new battery plant that Panasonic is building in Kansas City, Kansas.
Straubel left Tesla in 2019 in order to address the gap between demand for electric vehicles and the availability of materials needed to make them. Redwood quickly became the biggest lithium-ion battery recycler in the US before branching out into anode and cathode production in Nevada. The new loan will help create 3,400 construction jobs and 1,600 full-time employees, with hiring already underway, according to Straubel.
The Nevada hub is quickly being followed by a second plant Redwood is building in Charleston, South Carolina, which was announced in December. The $3.5 billion South Carolina facility will supply America’s rapidly expanding battery belt, which stretches roughly from Michigan to Georgia. Thursday’s loan announcement is to fund production in Nevada only.
Across its facilities, Redwood plans to produce enough materials for a million EVs a year by roughly 2025 and 5 million EVs a year by 2030, Straubel said.
The Advanced Technology Vehicle Manufacturing program is a component of the Energy Department’s Loan Programs Office, which finances energy technologies too risky to obtain traditional funding. The office had nearly $400 billion in lending authority after the 2022 climate law passed.
The office is probably best known for the $535 million loan guarantee it gave to Solyndra, the California company that flopped in 2011 and became the focus of intense criticism from congressional Republicans. But the program actually turns a profit, with more than $4 billion in interest collected so far, according to the Energy Department. That’s more than enough to cover its losses. The office backed foundational clean technologies, including the first large-scale US solar farms.
Former President Donald Trump initially sought to ax the loan program but later in his presidency used it for a $3.7 billion loan guarantee for two nuclear reactors being built by Southern Co. in Georgia. House Republicans are vowing strict oversight of any new funding, which Energy and Commerce Committee Chairwoman Cathy McMorris Rodgers has criticized as “Solyndra on steroids.”
The loans that built the Nissan Leaf — and Tesla
The Advanced Technology Vehicles Manufacturing program has committed loans for more than $13 billion in projects since the program was created under President George W. Bush in 2007. Bush’s successor, Barack Obama, approved a $5.9 billion loan that helped Ford Motor Co. avoid bankruptcy during the 2009 financial crisis and retool its factories for more fuel-efficient vehicles. A $1.45 billion loan in 2010 funded factories for Nissan’s first electric car, the Leaf.
Perhaps the biggest success was a $465 million loan that helped launch Tesla. That sum was paid back early and helped launch one of the most valuable companies in the world.
When Biden revived the automotive loan program in July 2022, a $102.1 million loan was given to Syrah Technologies to expand a processing facility for graphite-based anode material. That was followed by a $2.5 billion loan to Ultium Cells, a joint venture between General Motors and LG Energy Solution, to build EV battery plants in Ohio, Tennessee and Michigan. In January, a $700 million loan commitment went to Ioneer Ltd. to mine lithium in Nevada.
As important as the funding itself is the vote of confidence that comes with it, said Redwood’s Straubel. The company’s technology, finances and business plans have undergone intense scrutiny by the US loan office for more than a year, and that diligence provides assurance to Redwood’s private investors and future customers, he said. More broadly, the loans program shows auto manufacturers that the US is committed to the long-term success of the domestic supply chain.
“These industries have been incentivized in other parts of the world, specifically Asia, for many years,” Straubel said. “So it’s time for us to begin finding ways to support them if we really want to have these industries compete domestically.”
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