Panasonic Energy of North America, the largest supplier of battery cells for electric vehicles in the U.S., has struck a deal with Nevada-based battery recycling company Redwood Materials to buy a key material for the production of batteries.
Redwood Materials, which will supply high-nickel cathode to Panasonic Energy starting in 2025, says the agreement is worth billions of dollars, but declined to give an exact figure.
"I think it's a bigger deal than is immediately obvious to most people just because no one really sees or is familiar with what a cathode material is or where it goes," said Redwood Materials Founder and CEO JB Straubel, who was Tesla's chief technology officer until 2019, and helped invent a lot of the core technology used by the electric vehicle maker. "It (cathode material) may be around fifty percent of the cost of the battery."
Right now, Panasonic imports almost all of the cathode material used in the production of battery cells at its plant in Sparks, Nevada. That facility supplies cells to the Tesla gigafactory, which manufactures battery packs that power Tesla vehicles sold in North America. In July, Panasonic announced it will build a $4 billion battery plant in DeSoto, Kansas, outside of Kansas City. The new Panasonic facility will use high-nickel cathode supplied by Redwood materials when production starts in 2025.
For Straubel, the agreement with Panasonic Energy is further validation of his vision for Redwood Materials. When he started the company in 2017, he told investors and those following the company that battery recycling would be critical to the expansion and growth of electric vehicles, largely because it will be a more efficient and cost-effective way to supply the key components needed for battery cells.
"That's part of the significance of this announcement," he said. "This is the largest and really first Gigafactory scale supply chain announcement for the supply chain of batteries in the U.S..".
Redwood Materials currently employs approximately 600 workers in the U.S. and estimates that number to rise to approximately 1,500 by the time it is producing large quantities of high-nickel cathode. By 2030, the company expects to produce anode and cathode materials annually to power five million electric vehicles.