by Jason Hidalgo, Reno Gazette-Journal, February 9, 2023
Redwood Materials just secured a commitment from the federal government for a $2 billion loan for its massive battery recycling and manufacturing facility east of Reno-Sparks, a significant boost for the company as it looks to ramp up domestic operations.
The Department of Energy loan, which will be used to develop Redwood Materials’ 173-acre Battery Materials Campus at the Tahoe Reno Industrial Center, was announced Thursday morning. The project is in the same Storey County industrial park as Tesla’s first Gigafactory.
The loan commitment means that the DOE and Redwood Materials have agreed on loan terms but the company still needs to fulfill additional steps to finalize it. These requirements can be legal, contractual or financial, according to the DOE.
Redwood Materials commemorated the announcement with an event at its McCarran, Nevada, facility 30 minutes east of Reno. The guest list included investors, industry partners, local and state officials and the U.S. energy secretary.
Redwood Materials founder and CEO JB Straubel described the loan commitment as a key milestone that shows how serious the federal government is in establishing a battery supply chain rooted in U.S. manufacturing.
“We started in an industry that was not the most exciting, maybe not the most obvious and sexy industry that we could have four or five years ago,” Straubel said. “But we had this vision that this was going to be critical for the country and for the world so it’s exciting to see (that vision) starting to catch on broadly and see the support really accelerating.”
Why the Redwood Materials $2 billion loan matters
Once fully operational, the facility will be able to process “two-and-a-half Gigafactories worth of materials” — enough to supply 1 million electric vehicles per year, according to Straubel, who also co-founded Tesla alongside Elon Musk and previously served as Tesla’s chief technology officer.
The Biden administration has made shoring up the United States’ domestic battery sector a priority as demand from electric vehicles and consumer electronics continues to rise.
Of particular importance is narrowing the gap against China, which has “dominated every step of the supply chain” for batteries, according to U.S. Energy Secretary Jennifer Granholm.
“When President Biden took office two years ago, he set out to build a clean energy economy on American soil with American workers because he knew that for the United States to lead the world, we had to build these technologies here,” Granholm said. “And we have some catching up to do.”
Roughly 60% of the lithium processing and 72% of the cobalt processing in the world, for example, takes place in China. In contrast, “the U.S. virtually does zip,” Granholm said.
China also accounts for over 75% of global battery cell manufacturing capacity while the U.S. only accounts for about 10%.
Nevada projects have already been the recipient of the federal government’s increased focus on beefing up the domestic battery supply chain.
Just last month, the Ioneer Rhyolite Ridge project in Esmeralda County received a $700 million loan commitment from the DOE. American Battery Technology Co. and Lilac Solutions were awarded grants totaling nearly $108 million for lithium-related projects in Northern Nevada.
“For a couple of decades, the United States has just sort of stood with its arms folded and watched these manufacturing opportunities go to other countries,” Granholm said. “It’s time to get into the game.”
Nevada elected officials part of the push for Redwood Materials
The Redwood Materials facility has received strong support from officials who are keen to turn Nevada into a “lithium state.”
The support starts at the top, with Redwood Materials getting the backing of Nevada’s last three governors.
As governor, Brian Sandoval chaired the Governor’s Office of Economic Development that approved $392,610 in incentives for a then-fledgling Redwood Materials to build its Carson City headquarters.
Sandoval, now president of the University of Nevada, Reno, noted how different Nevada’s economic landscape was when he started as governor in 2010. At the time, the state was still reeling from the Great Recession and was desperate to diversify its economy.
Four years later, Tesla picked Northern Nevada as the site of its first Gigafactory.
Although getting Tesla to come to Nevada required a controversial $1.25 billion tax incentive, Sandoval believes the state’s efforts have paid off with the continued growth of Tesla — which just announced a $3.6 billion electric semi truck and battery facility — and now Redwood Materials.
Add companies such as Aqua Metals and American Battery Technology as well as Nevada’s mining industry, and the state now has the opportunity to create what Sandoval described as a “lithium loop” where resource gathering, battery manufacturing and recycling all occur in the same region.
“We believed in Tesla, we believed in Redwood Materials … and now we’re seeing the next big thing,” Sandoval said.
“This is the new Nevada that we dreamed of.”
Former Gov. Steve Sisolak was also on the Governor’s Office of Economic Development board that approved more than $105.6 million worth of tax incentives for the company’s battery recycling and material facility last December.
Redwood Materials was the first company to get the new incentive, which was designed for projects that invest $1 billion or more in the state and was originally created in response to Faraday Future.
“It’s an absolutely amazing operation,” Sisolak said at the time. “We’re going to put a lot of people to work and relieve some of our dependence from foreign supply chains.”
Gov. Joe Lombardo, who spoke at the Redwood Materials event, lauded the $2 billion loan commitment from the DOE as a great example of how public-private partnerships can help move Nevada forward.
“The investment right here in our own backyard is critical to keeping the United States at the forefront of manufacturing and job creation,” Lombardo said. “By producing critical battery materials domestically at scale in Nevada, we will drive down battery costs, create thousands of American jobs and help retain billions of dollars in our economy.”
Both of Nevada’s U.S. senators, Catherine Cortez Masto and Jacky Rosen, released statements supporting Redwood Materials on Thursday. Cortez Masto and Rosen lobbied the DOE in a letter to Granholm last year, encouraging her to approve the loan for Redwood materials.
The loan agreement is specifically targeted at Redwood Material’s Battery Materials Campus in Northern Nevada. Redwood Materials also has a second battery facility project just outside of Charleston, South Carolina, which it announced in December.
“Redwood will draw from this financing tranches that will support our phased ramp-up at this site and (the loan) allows us to further accelerate the progress we’re making at this site,” Straubel said.