Sequoia's highlight moment! $4 billion flows into electric vehicle battery recycling

Tesla Motors co-founder JB Straubel left the company in 2019 to devote his energies to a relatively unknown electric vehicle battery recycling startup, Redwood Materials. Tesla dominated the news cycle year after year, while Sequoia’s name became a drop in the ocean of media. Still, four years later, $4 billion is flowing into the company, and now everyone is talking about electric vehicle battery recycling, and there is a lot of buzz surrounding Sequoia.

Straubel founded Sequoia Materials in 2017 while still working at Tesla. The latest news is a new round of $1 billion in Series D equity funding announced earlier this week. Sequoia plans to use the funds to build a lithium-ion battery material recycling business in the United States. The goal is to provide a very important material supply chain for domestic electric vehicle battery manufacturers to comply with the Inflation Reduction Act of 2022.

Electric vehicle battery recycling also helps meet environmental concerns about the lithium supply chain. Lithium-ion batteries require lithium and other materials that need to be mined, including in open-pit mines. The use of large open-pit lagoons also amplifies the impact of lithium extraction.

Despite these impacts, lithium mining has not received much attention in the United States for decades. Only one lithium mine has been in operation in the United States since the 1960s. However, this is changing as demand for electric vehicles grows and federal policies support onshore supply of critical materials. Despite strong protests from local tribes and other environmental stakeholders, a new lithium mine is being built in Nevada. Another mine is also planned in North Carolina.

As the environmental impact of lithium mining becomes increasingly apparent, automakers are looking for more sustainable supply chain solutions. Electric vehicle battery recycling is helpful. It has been a busy year for Sequoia. The Series D round far exceeded the previous estimate of $700 million. The new round of financing adds another $1 billion to the previous $1 billion financing.

In February, the U.S. Department of Energy's Loan Programs Office provided Sequoia with a conditional loan of $2 billion to build a production park in McCarran, Nevada. Assuming Sequoia meets the loan conditions, a total of $4 billion in funding could be obtained.

The plan is to recycle used batteries and scrap from the plant to produce copper foil for electric vehicle battery anodes and active materials for cathodes, making McAllen the first such plant in the United States.

Electric vehicle battery recycling: It's complicated

The McAllen plant also processes end-of-life batteries from other consumer products, including cell phones, laptops and power tools, as well as other e-waste. Presumably, as more EV battery packs reach the end of their useful lives, used EV batteries will make up a growing portion of Sequoia’s feedstock.

That already complicates things. “The existing regulatory framework was not designed to address recycling pathways for large EV battery packs,” Sequoia explains. Transportation costs are also a thorny issue, including the cost of transporting spent batteries from a scrapped car to a recycling center.

Bidennomics

As for the $2 billion from the Energy Department, the loan program office was created by Congress during the Bush administration to help bring high-risk, high-reward new energy-related technologies to market. Now it has become a cog in Bidenomics, with the responsibility of ensuring the benefits of its loans trickle down to ordinary workers.

“Redwood Materials is expected to create approximately 3,400 high-paying construction jobs and employ approximately 1,600 full-time employees,” the loan program office explained in a Feb. 9, 2023 press release. “In addition, Redwood Materials will rely on a construction workforce comprised of union, minority, and women-owned businesses.”

“LPOs work with all borrowers to create good-paying jobs with strict labor standards during construction, operations and throughout the life cycle of the loan, and adhere to rigorous community benefit programs,” they added.

Will this have an impact?

If all goes according to plan, EV battery recycling will have a significant impact on the domestic battery supply chain in the U.S. The U.S. Department of Energy estimates that materials from Sequoia will support the production of more than 1 million new electric vehicles per year in the United States.

That could make up a large portion of electric vehicle manufacturing in the coming years. Annual U.S. vehicle production has been bouncing around 10 million vehicles in recent years. The U.S. Department of Energy projects that electric vehicles will account for 35% of the market by 2030, up from 2% today.

The U.S. Department of Energy noted: “To meet the growing demand for lithium-ion batteries, recycling will play an increasingly important role in the production of battery materials. On average, Sequoia can recover more than 95% of the key battery elements (including lithium, nickel, cobalt, manganese and copper) in scrapped batteries, and then use these metals to manufacture anode and cathode components domestically for U.S. battery manufacturers.”

Straubel's Experience

Meanwhile, Sequoia has plans to build a second electric vehicle battery recycling park near Charleston, South Carolina.

“Similar to our Nevada operations, Sequoia’s South Carolina operations will be powered 100% by electricity, with no fossil fuels used in our processes (we won’t even be laying natural gas lines on site),” the company explained in a press release last year.

Electric vehicle battery recycling was a big shift for Straubel, who joined Tesla Motors in time to launch the company’s first car, the Roadster, in 2008. The $100,000 electric two-seater has thousands of 18650 rechargeable lithium-ion cells under its hood. The cells, the same ones used in laptops and other electronic devices, are just 66 millimeters long and 18 millimeters in diameter.

Tesla Motors was founded in 2003 by Martin Eberhard and Marc Tarpenning. Straubel joined the company as chief technology officer in 2004 and stayed until 2019.

“Stroubel wasn’t just Tesla’s CTO; he invented the automaker’s core technology,” read a CNBC headline when he left.

“His name appears on most of the patents Tesla has applied for, especially those related to electric vehicle batteries — safety, architecture, monitoring and power management,” the CNBC reporter added.

Now he is back at Tesla and was elected to the board of directors at the shareholder meeting last May.

Straubel joined Tesla in 2004 and served as its chief technology officer for 14 years. He was instrumental in Tesla's battery design and led the construction and concept design of the Nevada Gigafactory and the production of the Model 3.

(Original source: Clean Technology Global Lithium Battery Network, New Energy Network Comprehensive)