Ford partners with, invests $50M in Tesla co-founder's battery recycling startup

Jordyn Grzelewski
The Detroit News

Ford Motor Co. is partnering with and investing $50 million into a battery recycling startup led by a Tesla co-founder as the Dearborn automaker works to shore up its battery supply chain for a forthcoming wave of electric vehicles.

Ford and Redwood Materials announced the deal Wednesday and said the two companies will work together "to integrate battery recycling into Ford's domestic battery strategy."

“Ford is making electric vehicles more accessible and affordable through products like the all-electric F-150 Lightning, Mustang Mach-E and E-Transit, and much more to come,” Ford CEO Jim Farley said in a statement. “Our partnership with Redwood Materials will be critical to our plan to build electric vehicles at scale in America, at the lowest possible cost and with a zero-waste approach.”

Redwood, which was started by Tesla co-founder JB Straubel and is based in Nevada, claims that its recycling technology can recover, on average, more than 95% of materials such as nickel, cobalt, lithium and copper that are found in EV batteries. Those materials then can be reused.

Meanwhile, Redwood announced last week that it will produce battery materials, supplying anode copper foil and cathode materials to battery makers. The startup plans to ramp up to 100 gigawatt hours of cathode material, enough to supply more than 1 million EVs by 2025. The company said Wednesday that as part of its partnership with Ford, "we're discussing how Redwood could supply Ford’s American battery facilities to ensure a steady, domestic source of sustainable battery materials to fuel the production of Ford electric vehicles."

Straubel recently told Bloomberg that his broader ambition is to move much of the battery component industry from Asia to the U.S.: "It's both inspiring and terrifying to see so many nations and car companies announcing their shift to electric vehicles. But there's a massive gap in what needs to happen."

Though electric vehicles today make up just a sliver of new-vehicle sales, industry experts and forecasters expect that to grow significantly before decade's end as governments around the world tighten environmental regulations to combat climate change and automakers bet heavily on electrification. President Joe Biden wants half of vehicle sales in the U.S. to be electric by 2030.

Establishing a battery recycling infrastructure is one of the keys to securing the domestic battery supply chain that the U.S. needs to be a major player in the electric transition, the U.S. Department of Energy has said. And, as The Detroit News previously reported, there is money to be made in EV battery recycling.

Battery recycling also is an environmental imperative. Most lithium-ion batteries used in EVs today will last between 11 and 13 years. If they end up in a landfill at the end of their life, they could pose environmental and health risks and require new raw materials mining projects that raise environmental and human rights concerns.

"The need for battery recycling is going to be huge over the coming decades, because the amount of batteries that we're going to need to replace the entire vehicle fleet with electric is going to be tremendous," said Sam Abuelsamid, principal analyst leading e-mobility research at Guidehouse Insights.

"Extracting all raw materials for that battery production is not feasible," he added. "We need to be able to recycle as much of those key materials as we can to produce new batteries as vehicles go out of service and batteries reach their end of life. If you actually want to have a real environmental impact by going electric, part of that is reusing as much of those raw materials as possible."

Other automakers have begun taking steps on battery recycling, as well. GM, for example, earlier this year partnered with Canadian battery recycling company Li-Cycle to recycle scrap metal from battery manufacturing.

In a news release, Ford and Redwood cast the deal as a way to drive down costs and secure Ford's domestic supply chain for the parts needed for electric vehicles, as well as a way to reduce reliance on imports and mining of raw materials. Ford has begun launching its first portfolio of battery-electric vehicles, and plans to invest $30 billion in electrification through 2025. The $50 million deal, which the companies said would help Redwood expand its U.S. manufacturing footprint, is part of that commitment.

Earlier this year, Ford announced plans to form a joint venture with battery maker SK Innovation to manufacture batteries at multiple plants in North America beginning mid-decade. Ford and SK are in the process of forming the JV, which Ford said Wednesday remains subject to definitive agreements and regulatory approvals.

“We are designing our battery supply chain to create a fully closed-loop lifecycle to drive down the cost of electric vehicles via a reliable U.S. materials supply chain,” Lisa Drake, Ford’s North America chief operating officer, said in a statement. “This approach will help ensure valuable materials in end-of-life products re-enter the supply chain and do not wind up in landfills, reducing our reliance on the existing commodities supply chain that will be quickly overwhelmed by industry demand.”

In the longer term, Ford said, it plans to work with Redwood to collect and disassemble end-of-life batteries from Ford's EVs for recycling and remanufacturing. To start, the partnership will involve recycling scrap from battery production.

“Increasing our nation’s production of batteries and their materials through domestic recycling can serve as a key enabler to improve the environmental footprint of U.S. manufacturing of lithium-ion batteries, decrease cost and, in turn, drive up domestic adoption of electric vehicles,” Straubel, CEO of Redwood, said in a statement.

Today, China accounts for more than 80% of global production of battery components and materials, according to BloombergNEF data.

“Redwood and Ford share an understanding that to truly make electric vehicles sustainable and affordable, we need to localize the existing complex and expensive supply chain network, create pathways for end-of-life vehicles, ramp lithium-ion recycling and increase battery production, all here in America," said Straubel.

Twitter: @JGrzelewski

Staff Writer Riley Beggin contributed.