Why Amazon and Panasonic are betting on this battery recycling startup

Often referred to as a humble and trailblazing engineer, JB Straubel, co-founder and former CTO of Tesla, has spent 15 years behind the scenes with some of the company's key technologies. This characterization, which intensified as the hype and media attention increased for Elon Musk, CEO of Tesla, says half a truth.
Straubel is not prone to self-promotion or even progress reports. His personal Twitter account and that of his startup Redwood Materials have never tweeted. And he likes to work on complex problems.
However, his reluctant delivery obscures his ambitions and plans for Redwood Materials, the recycling startup he co-founded in 2017. Straubel is actively planning and working to make Redwood one of the world's largest battery recycling companies, with numerous facilities strategically located around the world.
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"This is an important industry and a big problem, and it is a major reason why I want to spend my time with it," Straubel said on the TechCrunch virtual stage at TC Sessions: Mobility on Wednesday. "I want to do something that can actually have a significant impact on sustainability in the world. And that requires scalability. So I'm very excited to continue expanding this and be one of the largest battery recycling companies, if not one in the world. And finally one of the major battery materials companies in the world. "
The Carson City, Nevada-based company that Straubel operates aims for a circular supply chain. The company pursues a business-to-business strategy, in which the scrap from battery cell production and from consumer electronics such as cell phone batteries, laptops, power tools, power banks, scooters and electric bicycles is recycled. Redwood collects scrap from consumer electronics companies and battery cell manufacturers like Panasonic. Then these discarded goods are processed, materials like cobalt, nickel and lithium that are normally mined are extracted, and these are then shipped back to Panasonic and other customers. Redwood Materials has a number of customers and has only publicly announced that it is working with Panasonic and Amazon.
Redwood materials
Photo credit: Redwood Materials
While Redwood Materials is a B2B company, its business model could one day evolve. The interest was so great that Straubel is now considering whether to expand into a more consumer-oriented company. Redwood may never offer collection points where consumers can drop off old smartphones and other consumer electronics. However, the number of inquiries from local government officials as well as consumers looking for ways to recycle electronics, including the batteries in electric vehicles, has led Straubel to at least consider the option.
It is known that numerous facilities - maybe dozen - are set up regionally in Straubel and in some cases are set up together with factories if the customer is large enough. The company has not disclosed where these future facilities will be located.
The company has two recycling and processing operations in Carson City. And while that barely qualifies it as one of the world's largest battery recycling companies, Redwood is already operating on the "gigawatt scale".
"We have been able to grow and increase our capacity extremely quickly, and I expect that will follow roughly the level of lithium-ion production that was a few years ago," he said.
To put Straubel's words into context, consider the Gigafactory Panasonic operates with Tesla in Sparks, Nevada. Today the factory can produce 35 gigawatt hours of lithium-ion battery cells annually. If Straubel reached the scale he was photographing for, Redwood would provide Panasonic with enough materials to match that production capacity. Achieving this goal would fundamentally transform Panasonic's supply chain from mined minerals to those recycled by Redwood. These recycled materials would come from Panasonic's manufacturing waste as well as other consumer electronics sources.
Celina Mikolajczak, vice president of battery technology at Panasonic Energy of North America, said it would be stupid for the company to ignore the recycling supply.
"We have already dug these metals out of the ground, we have put them in cells, they sit there," said Mikolajczak during the joint interview with Straubel at TC Sessions: Mobility. "And yes, cells are a bit difficult to deal with, they process a little differently than a typical metal ore, right, but at the same time we have a much higher concentration of the metals we need than a typical metal ore. It makes perfect sense after Recycle and do it aggressively because there is a lot of it and there are already many batteries in the world. "
Second life batteries
Today, most lithium-ion batteries used in smartphones and other consumer electronics are not recycled and either sit forgotten in the owner's garbage drawer or end up in the waste stream and landfill. Electric vehicles have a much longer shelf life, so to speak. But ultimately, batteries used in electric vehicles will present a challenge for automakers and communities dealing with the waste.
Straubel would like Redwood to be part of this old solution for electric vehicle batteries as well.
"The problem of the second life and how these batteries are restored is really interesting and there are many different ideas about how batteries can get into a whole second application," Straubel said, noting that Redwood was not directly involved in second life use works cases. "It's great when we can reuse these devices for a while, but that only delays the inevitable. You eventually need a proper disposal and recycling solution."
Straubel said he wants Redwood to be that setback.
There are a number of automakers who have talked about reusing EV batteries for energy storage. However, the details of how an OEM could recapture these batteries from consumers are sparse. Straubel wants Redwood to be an independent company so that it can work with all OEMs that make electric vehicles and provide its materials across the industry.
Redwood has never spoken publicly about which automakers it might, or already have, partner with. However, when looking across the EV landscape, some likely partners emerge. For example, the electric vehicle startup Rivian never announced plans to work directly with Redwood Materials. But the companies share Amazon as an investor and a customer. RJ Scaringe, CEO of Rivian, and Straubel not only know each other, they also share a common vision.
The startup Redwood Materials by Tesla co-founder JB Straubel is one of Amazon's first five climate fund investments
Scaringe talked about plans for second-life batteries - albeit without a lot of details - as well as what happens at the end of a battery's life. Rivian has no vehicles on the road today, so it's a seemingly distant problem. That changes in 2021 when the company brings an electric pickup truck and SUV to the consumer market, as well as electric vans to Amazon. Ultimately, Rivian has a contract to deliver 100,000 electric vehicles to Amazon.
"I'm very excited to see what JB [Straubel] is doing, because we would like these vehicles to serve as the raw material and the batteries of these vehicles to serve as the raw material to then start another life cycle for another set of batteries and electricity vehicles, "Scaringe said in an interview last month at the Bloomberg Green Summit, in which he joined Straubel and Ross Rachey, directors of Global Last Mile Fleet and Products at Amazon, on a panel. "The ability to control this, essentially as a closed ecosystem, allows us to learn and build the muscle memory for it as the entire industry shifts to not just electrification but various consumption methods as well."
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Everything about scaling
Straubel said he was not interested in bringing redwood materials to the public, especially not in the short term.
"Good or bad, I had a front row seat for some of the less efficient parts of a public company," said Straubel, a comment referring to Tesla's public status. "It's not something I rush to. I think being public is kind of like being successful, which doesn't really make sense."
He said his goal is for redwood to make an impact, do something useful on an industrial scale, and generate returns - aka profitable.
"It's not about going public quickly or trying to offer investors or something a quick return," said Straubel. "That's what I really want to spend my time on. And I see this as a very long-term growth mission that will likely stretch over decades."
Smartphone discarded consumer electronics
Workers sort a pile of used cell phones in New Delhi, India. (Image Credit: Getty Images / Kuni Takahashi / Bloomberg)
Straubel talks a lot about scalability, both in terms of his vision for redwood and the current state of e-waste in US consumer trash drawers. It was the scale of the Gigafactory, used by Panasonic to manufacture battery cells and by Tesla to manufacture the battery packs and electric motors for its vehicles, that partly prompted Straubel to start Redwood in the first place.
"Because the world electrifies transportation, it requires so many different materials and the supply chain in front of the factory is often underestimated in my opinion," he said. "The Gigafactory is a bit of an iceberg - there is so much of it under the surface, at the suppliers, in the mines and refineries and all the different things that need to be fed into it that you normally don't see."
Parts of the supply chain became more of a bottleneck with the gigafactory ramping up, he added.
"You can certainly see that Tesla is focusing more on that, I think rightly," said Straubel, alluding to Musk's recent public comments on the need to focus on the broader supply chain of materials like nickel. "That was a very interesting area that I thought wasn't getting that much attention and lifespan and recycling as part of this materials supply chain is just an incredibly powerful area where I think we can have a huge impact." about the sustainability of battery manufacturing. "
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