Redwood Materials to get $2 billion DOE loan for battery materials

The US Department of Energy (DOE) has made a conditional commitment to give Redwood Materials a $2 billion loan to expand a factory in Nevada that will make cathode material and copper foil for lithium-ion batteries. The facility will also recycle old batteries.

Redwood aims to make 100,000 metric tons (t) of cathode material and 36,000 t of copper foil per year, which is enough to build 1 million electric vehicles. Those targets are comparable with the scale of battery material plants in Asia, where most battery components are made today.

North America currently has very little cathode production capacity, but over the past year several firms have announced plans for large facilities. LG Chem is planning a 120,000 t nickel-based cathode plant in Tennessee, while Umicore, BASF, and a joint venture between GM and Posco all want to build nickel-based cathode plants in Canada. Gotion High-Tech and ICL Group hope to build factories for lithium iron phosphate cathode material in Michigan and Missouri, respectively.

Redwood started production of copper foil last month and expects to start making nickel-based cathode material later this year. In addition to the expansion of its Nevada operations to be funded by the DOE loan, Redwood announced in December that it plans to build a $3.5 billion battery component factory in South Carolina that would be similar in size to the expanded Nevada plant.

By 2030, Redwood wants to be producing enough anode and cathode material to make 5 million electric cars per year. The company started production of copper foil, which is used in anodes, last month, but won’t start cathode production until later this year. “It’s a long cycle. There’s a lot of investment and effort needed, but we’re well on our way,” Redwood CEO JB Straubel said at an event announcing the loan.

The loan carries risk for the US government, says Max Reid, a battery analyst at the consulting firm Wood Mackenzie. Redwood lacks cathode manufacturing experience, and the company’s ambition to include recycled material adds complexity to its process. Redwood will receive the loan in tranches based on the project’s progress, which Reid says limits the risk.

If the project is a success, Reid says, it would be a coup for the US, which doesn’t produce enough battery components to supply the dozens of battery cell factories being built across the country. “These are the areas that are certainly in need of financial assistance … if the US is wanting to be more self-sufficient,” he says.