Tesla co-founder’s battery recycling start-up closes at $5 billion valuation

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Tesla co-founder JB Straubel’s battery recycling start-up is in talks to raise $700 million in a deal that would be valued at about $5 billion and help finance the company’s first major plant in Nevada.

Straubel founded Redwood Materials in 2017 to reshape the supply chain for electric vehicles by recycling materials into batteries and reducing the need to mine minerals needed by the industry.

Since its inception, Redwood has been backed by major investors including asset managers T Rowe Price, Baillie Gifford and Fidelity. Many of its existing investors are set to participate in its new fundraise, according to people familiar with the matter.

After raising $700mn in 2021 at a $3.7bn valuation, Redwood received a conditional commitment for a $2bn loan from the US Department of Energy earlier this year.

The loan is intended to help Redwood fund the development of a battery recycling facility near Reno, Nevada, that will turn final battery and production scrap into critical materials for use in electric vehicles.

At full capacity, the plant’s output is expected to support production of more than 1 million electric vehicles per year, as the US market grows and President Joe Biden seeks to accelerate the country’s transition to renewable energy.

People familiar with the matter cautioned that the new fundraising has not yet been finalized, but said talks have moved forward. Redwood declined to comment.

Strobel, who co-founded Tesla in 2003, was the carmaker’s chief technology officer for 15 years, playing a key role in creating the company’s first powertrain and helping build its Gigafactory. He recently joined the board of Tesla.

Biden has set a goal that by 2030, half of all new vehicles sold in the US will be electric. Electric vehicle sales in the US reached the 4 million mark at the end of June, according to data from public policy consultancy Atlas.

Experts say a combination of price cuts by companies such as Tesla and Ford, tax credits of up to $7,500 for consumers and more manufacturing capacity is driving sales.

In December, Redwood announced plans to develop its next facility on more than 600 acres near Charleston, South Carolina, involving a $3.5 billion investment.

Current investors in the group also include Breakthrough Energy Ventures, Goldman Sachs and Amazon’s Climate Pledge Fund.

Get Free Battery Updates

we will send you one myFT Daily Digest Latest Email Rounding batteries News every morning.

Tesla co-founder JB Straubel’s battery recycling start-up is in talks to raise $700 million in a deal that would be valued at about $5 billion and help finance the company’s first major plant in Nevada.

Straubel founded Redwood Materials in 2017 to reshape the supply chain for electric vehicles by recycling materials into batteries and reducing the need to mine minerals needed by the industry.

Since its inception, Redwood has been backed by major investors including asset managers T Rowe Price, Baillie Gifford and Fidelity. Many of its existing investors are set to participate in its new fundraise, according to people familiar with the matter.

After raising $700mn in 2021 at a $3.7bn valuation, Redwood received a conditional commitment for a $2bn loan from the US Department of Energy earlier this year.

The loan is intended to help Redwood fund the development of a battery recycling facility near Reno, Nevada, that will turn final battery and production scrap into critical materials for use in electric vehicles.

At full capacity, the plant’s output is expected to support production of more than 1 million electric vehicles per year, as the US market grows and President Joe Biden seeks to accelerate the country’s transition to renewable energy.

People familiar with the matter cautioned that the new fundraising has not yet been finalized, but said talks have moved forward. Redwood declined to comment.

Strobel, who co-founded Tesla in 2003, was the carmaker’s chief technology officer for 15 years, playing a key role in creating the company’s first powertrain and helping build its Gigafactory. He recently joined the board of Tesla.

Biden has set a goal that by 2030, half of all new vehicles sold in the US will be electric. Electric vehicle sales in the US reached the 4 million mark at the end of June, according to data from public policy consultancy Atlas.

Experts say a combination of price cuts by companies such as Tesla and Ford, tax credits of up to $7,500 for consumers and more manufacturing capacity is driving sales.

In December, Redwood announced plans to develop its next facility on more than 600 acres near Charleston, South Carolina, involving a $3.5 billion investment.

Current investors in the group also include Breakthrough Energy Ventures, Goldman Sachs and Amazon’s Climate Pledge Fund.