US battery recyclers & Volkswagen form alliance

new York The environmental balance of the electric car also depends on a crucial question: What becomes of the batteries when they are no longer needed? Batteries are not only an important component to give cars more range – they are also full of rare raw materials such as cobalt, copper, nickel and lithium.

VW North America is therefore opting for a new partnership for battery recycling. The Handelsblatt learned in advance that VW wants to work with the US start-up Redwood Materials from Nevada in the future. The company specializes in recycling electric car batteries.

Behind Redwood is JB Straubel, a real icon of electric mobility. Straubel was once the fifth employee of the then newly founded electric car manufacturer Tesla and was therefore on board even earlier than Elon Musk. For years he was responsible for the construction and drives of the Tesla models.

To ensure that batteries can be reused later, VW wants to take recycling into account during development and production. The goal is to build a “circular electric car economy,” explains VW North America boss Scott Keogh. “Redwood Materials is a great partner to help us accelerate the adoption of electric vehicles in America,” he said.

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Put more soberly, VW wants to reduce the cost of the batteries by having to mine fewer rare raw materials. After all, electric cars are expected to account for more than half of VW sales in North America by 2030. Keogh is planning 25 new vehicle models for this purpose. In the future, Redwood will be responsible for recycling the batteries they contain.

Profitable recycling

VW is relying on around 1,000 VW and Audi dealers in the USA to organize the recycling. They should identify electric cars at the end of their life cycle and take over the removal of the batteries. Securely packaged, these will then be transported to Redwood’s headquarters in Nevada, where they will be disassembled and recycled.

Recycling at Redwood Materials

The US company is the only recycling partner for VW North America.

(Photo: Redwood Materials)

Redwood wants to use chemical processes to recover the primary raw materials such as cobalt, copper, nickel and lithium and achieve a recycling rate of over 95 percent. After refining, the raw materials are processed into components for new batteries: anode copper foils and cathodes, which Redwood intends to sell to US battery cell manufacturers.

Billing is by kilogram. In turn, by recycling the batteries, Redwood can resell the recovered materials on the market at lower cost. The partnership will also include prototypes, such as new batteries from VW’s battery engineering lab in Chattanooga, which the group opened in June.

“The transition to e-mobility and renewable energy is here, and the batteries that power this technology offer incredible opportunities,” says Redwood CEO Straubel. “Each year, more and more batteries are reaching the end of their useful life. This makes a growing and infinitely recyclable resource available.”

>> Read about this: The electric car boom threatens to fail – “There is simply not enough lithium there”

Redwood expects the demand for the necessary raw materials to increase by 500 percent in the coming years with the growth of e-mobility. It is hoped that recycling could at least alleviate the expected shortage somewhat. With a higher proportion of recycling, less important raw materials would also have to be transported around the world.

Expansion to Europe planned

Together with VW, they want to “create a domestic, circular supply chain for batteries,” says Straubel. This should improve the ecological footprint of lithium-ion batteries, reduce their costs and thus increase the acceptance of electromobility.

According to Redwood in Nevada, it already recycles lithium-ion batteries with a capacity of more than six gigawatt hours every year. That corresponds to 60,000 electric car batteries. The raw materials that arrive at Redwood include old battery packs, but also waste from battery production.

The company explains that its own work makes up the bulk of today’s recycling of lithium-ion batteries. In the coming years, Redwood also wants to expand to Europe. According to group circles, Germany is considered a promising location.

>> Read about this: Into the future with “Salzgiga” – VW lays the foundation for a model plant for battery production

After the last round of financing last summer, Redwood is valued at almost four billion dollars. An IPO is currently not planned, instead the company wants to continue to grow as a private company and reduce the costs of recycling in the long term, according to the headquarters in Carson City.

Redwood boss Jeff Brian, known as “JB”, Straubel is one of the best-known figures in the electric car industry. At Tesla he developed several innovations in battery design. As early as 2005, he and his engineers succeeded in preventing the risk of a battery exploding as a result of overheating by effectively shielding the individual cells that make up a battery pack from one another.

Battery recycling at VW

So far, the group has only operated its own test facilities.

While Tesla has long been known around the world, Redwood’s breakthrough could still take time. In the coming years, the company wants to set up recycling plants on an industrial scale and win new partners. In addition to VW, many big names in the auto industry are working with the start-up: Two weeks ago, Redwood announced a partnership with Toyota, and the start-up is already cooperating with Ford and Volvo.

Means against the scarcity of raw materials?

Redwood is the only recycling partner for VW North America, and the cooperation is to be evaluated in 2025. The group does not want to give an estimate of the sales volume of the cooperation.

Observers praise the partnership. “It is very welcome that VW is joining other manufacturers and making sure that the batteries are reprocessed at the end of their life cycle,” says Christian Koenig. The car expert has worked for Porsche in North America and runs an electromobility consultancy in Atlanta. Global sales of electric vehicles have tripled in the past two years. And demand will continue to rise. This leads to a massive demand for raw materials such as lithium, cobalt and nickel and the corresponding recycling capacities.

According to Koenig, Redwood is the right partner for recycling: “JB Straubel is a proven battery expert and, as Tesla’s head of technology for many years, has played a major role in the company’s success. Now he has dedicated himself entirely to battery recycling and is working on innovative recycling processes.”

But it is also clear that the market of the future will be competitive. Aurubis AG from Hamburg recently announced in Augusta, Georgia, that it would build a $320 million recycling plant by 2024. And in Europe, commodity giants such as Glencore and Umicore, as well as specialized companies with new processes, will also enter the market, predicts consultant Arthur D. Little (ADL).

ADL consultant Philipp Seidel does not believe that recycling can solve the acute shortage of raw materials. “In the next ten to 15 years there will simply be too few used batteries from electric vehicles and there will be too few rejects from battery production. Production is just starting up.” Nevertheless, it promises relief. “In 2030, 15 to 20 percent of the lithium requirements of the automotive industry could be covered by recycling,” says Seidel.

VW wants to set up its own battery production in the USA. In Germany, the group could take over the recycling itself. The carmaker recently announced the expansion of the Salzgitter battery location.

More: In this way, used cars are to become raw material suppliers

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