Redwood Materials is partnering with Ultium Cells to recycle GM's EV battery scrap

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Redwood Materials, the battery recycling startup founded by former Tesla co-founder JB Straubel, will be recycling production scrap for batteries going into General Motors electric vehicles.

The company announced Thursday that it’s working with Ultium Cells, the joint battery manufacturing venture between GM and LG Energy Solution, to recycle cathode, anode and cell scrap from both their Warren, Ohio and Spring Hill, Tennessee facilities.

Battery recycling is a hot industry as automakers and battery manufacturers seek to control their battery material supply, rather than rely on China, the global leader in the space. Incentives in the U.S. and in regions like Europe are piling up for recycled and domestically produced critical battery materials -- like lithium, nickel, cobalt, manganese and graphite.

President Joe Biden’s Inflation Reduction Act, signed in August 2022, provides a tax credit for battery manufacturing and critical mineral processing. Redwood benefited directly from that bill passing in February 2023, when the Department of Energy gave the startup a $2 billion loan to build out its battery recycling facility in Nevada. The DOE also gave Ultium Cells a $2.5 billion loan to develop its cell manufacturing facilities in the U.S.

The runway to actually recycle EV batteries is a long one, since most of those batteries are being produced today and won’t reach the end of their lives for many years. That’s why deals like this one with Ultium to recycle scrap are so important. Redwood -- which also has deals with Toyota and Panasonic (which produces batteries for Tesla) -- has already become a household name in EV battery recycling, but any startup in this space needs a near-term strategy to stick to stay on the long runway to profits.

And scrap production is no small feat. A Redwood spokesperson told TechCrunch that the average battery factory generates 5% to 10% in scrap, which translates to Redwood managing around 10,000 tons of material annually -- the equivalent of daily truckloads of scrap.

Redwood will recycle Ultium’s scrap and process it into high-quality battery materials, which are then supplied back to cell manufacturers as domestically produced anode and cathode components, the company said.

Processing the materials -- not just recycling them -- is also part of Redwood’s long-term strategy, as the price of materials fluctuates regularly. The big money will come from processing materials, which today usually get sent to Asia for processing and then sent back to the U.S.

In August 2023, Redwood raised $1 billion to expand its battery recycling facilities, with part of its goal to boost its anode copper foil and cathode active material production capacity. The company said at the time it expected to produce around 100 gigawatt-hours annual capacity of cathode active materials and anode foil, which can power 1 million EVs, by 2025. By 2030, Redwood hopes that production output would scale to 500 GWh per year, which could power 5 million EVs. The company has not confirmed if that timeline is still accurate.

Ultium Cells’ two facilities that will be supplying scrap to Redwood are each 2.8 million-square-feet operations that are expected to produce more than 80 GWh combined battery cells annually, and Redwood says it will receive the majority of that scrap. In 2021, Ultium also partnered with Canadian battery recycling firm Li-Cycle to recycle scrap, that deal was mutually dissolved, according to GM. Ultium is also in the process of building a third facility in Michigan. Redwood did not say if it will get the scrap from that factory as well.

Update: GM confirmed its deal with Li-Cycle is no longer ongoing.