Nestled in the high desert just 25 miles east of Reno, Nevada, Gooseberry Mine is a relic of a bygone era where gold was once extracted from the earths crust. This location, now primarily abandoned, serves as a stark reminder of the mining industrys past. However, the landscape is being transformed by innovation and the forward-thinking vision of Redwood Materials, a company dedicated to recycling and reshaping the future of electric vehicle (EV) battery production.

During a visit in late March, I found myself standing a few hundred yards from this historical mine, in a makeshift chemistry lab that is rarely accessed by outsiders. My guide, Adam Kirby, who serves as project manager at Redwood Materials, held aloft a small capsule containing a dark powder. Black gold, he beamed, referring to Cathode Active Material (CAM), a crucial component that represents approximately 60% of the value of EV batteries and about 15% of the total cost of an electric vehicle.

Traditionally, oil has been dubbed the original black gold, fueling automobiles for over a century. However, with the advent of electric vehiclesspearheaded by companies like Teslathis reliance is shifting. The automotive industry is pivoting towards a more sustainable model that relies on electricity instead of fossil fuels. Yet for this shift to become reality, the need for effective recycling of EV battery packs is imperative.

Founded by Tesla co-founder JB Straubel in 2017, Redwood Materials is embarking on a monumental challenge to construct North Americas largest battery recycling facility. At the heart of this endeavor lies CAM, which Straubel refers to as the companys next significant venture.

With nearly a decade of experience tackling battery recycling challenges, Redwood has garnered approximately $2 billion from major investors such as Fidelity, Goldman Sachs, Baillie Gifford, and Amazon. Presently, the company successfully recycles over 70% of lithium-ion batteries in North America. If youve ever disposed of an old laptop or smartphone at a recycling center in the United States or Canada, its likely that these devices made their way to Redwoods vast 300-acre campus, nestled in the desert.

Redwood Materials employs a meticulous heating process to extract valuable base ingredients from discarded batteries, including nickel, manganese, cobalt, and lithium. These extracted metals are not just valuable in their own right; they have also allowed Redwood to generate hundreds of millions of dollars in revenue by supplying raw materials back into the EV supply chain.

The next phase of Redwoods ambitious plan is to transform these raw materials into CAM, a process that is both technologically demanding and financially intensive. As I drove away from the lab with Kirby, we passed by a massive building under construction, large enough to dwarf nearby earth-moving trucks. This facility is set to house the full-scale production process for CAM, featuring an impressive heated conveyor belt stretching over 150 feet.

Projects like Redwood are ambitious multibillion-dollar capital expenditures, noted Chris Evdaimon, an investment manager at Baillie Gifford, who has recently visited the site. Successful execution requires backing experienced individuals who can navigate the complexities of raising equity and debt while fostering governmental trust.

Upon my return to the main Redwood office, I met with Cal Lankton, the Chief Commercial Officer, in the aptly named Nickel office, located next to the Manganese and Lithium rooms. Lankton recounted the surprising revelation that sparked the creation of Redwood: the materials used in lithium-ion batteries can be reused indefinitely. Unlike traditional black gold, which is depleted with use, these battery components can be recycled over and over again.

According to Lankton, this crucial insight from JB Straubel distinguishes this automotive transformation from past revolutions. Redwoods processes can now recover an impressive 98% of critical minerals from batteries, but there remains a significant hurdle: once salvaged, these materials are often shipped overseas, primarily to China, for refinement. This inefficient supply chain results in the ingredients traveling roughly 50,000 miles before making their way back to a U.S. gigafactory for battery cell assembly, as highlighted by Evdaimon.

To meet lofty goals, such as having 50% of all vehicles be electric by 2030, a robust domestic industry is essential. Redwood Materials is crucial for achieving this objective, Evdaimon emphasized. Lankton outlined Redwoods vision of a circular battery value chain, noting that no other company in the Western world currently operates at such scale.

To build this cycle, Redwood is actively seeking used batteries from diverse sources, including production scraps from gigafactories operated by notable companies like Panasonic, Tesla, and automotive giants such as Toyota, Ford, GM, and BMW. They often pay to access this supply, confident in their ability to turn hazardous waste into valuable resources.

Visitors to Redwood's high desert office can even drop off old laptops and any device equipped with a rechargeable battery in a designated black letterbox, promoting recycling initiatives. Currently, Redwood handles more than 20 gigawatt hours worth of lithium-ion batteries annuallyequivalent to roughly 1.6 billion smartphones.

The sight outside the Redwood office is striking: a vast expanse filled with batteries, arranged in orderly squares with deliberate gaps to prevent fires. Some batteries retain a charge and are stored outside to discharge safely before processing begins.

As we drove through Redwoods desert campus, I witnessed the careful heating of batteries, a process designed to release essential minerals and metals. This step does emit some volatile organic compounds, which are meticulously filtered and processed through a complex system of tubes, somewhat resembling a gigantic Rube Goldberg machine under the Nevada sun.

Kirby explained that many other battery recycling companies neglect this critical environmental step, making their operations less eco-friendly. Following the heating process, hydrometallurgy is used to refine and purify the extracted metals and minerals essential for the production of CAM.

While Redwood's equipment may have been sourced from elsewhere, numerous adjustments have been made to enhance efficiency, remarked Evdaimon. These innovations collectively render Redwood the leading recycler in this industry across the Western world.

Looking ahead, Redwood aims to produce 100 gigawatt hours of CAM annually by 2026, which would enable enough batteries to power approximately 1.3 million electric vehicles each year. This demand is critical, as North America is projected to require 12 million tonnes of CAM by 2030, a market currently dominated by producers in China, Korea, and Japan.

Lankton articulated the appeal of Redwoods business model, emphasizing that various partners and manufacturing plants are eager to procure any CAM produced. The integration of more processes within the value chain increases the product's value and enhances profit margins, he noted, highlighting the continued expansion of Redwood's capabilities.

However, creating high-quality CAM is no easy feat. It requires precise combinations of nickel, manganese, cobalt, lithium, and trace amounts of other rare-earth minerals to form a lattice structure that must be both sturdy and efficient at facilitating the movement of lithium ions during charging and discharging. The end product resembles a black powder which is then packed into large plastic bags for shipping, Lankton explained, but achieving this quality is an incredibly intricate process.

Redwood's journey to produce CAM involves three distinct stages. The initial stage occurs in the lab where the core chemical processes are rigorously tested on a small scale. The second stage features a demonstration plant that mimics the ultimate production facility, allowing the company to confirm that its methods yield reliable results. The final stage involves scaling up operations in the massive CAM production building, which is currently under construction.

Despite being in this intermediary phase, Redwood has significantly mitigated risks associated with the final step of production, with Lankton expressing confidence in their ability to meet established targets. This confidence is bolstered by existing multibillion-dollar contractual agreements with major players like Toyota and Panasonic.

While Redwoods mission is ambitious, it is not without challenges. Competing against the formidable manufacturing capabilities of China adds an additional layer of complexity to the endeavor. The company previously ventured into producing copper foilthe key ingredient for battery anodesbut faced overwhelming competition from Chinese manufacturers, leading to a significant drop in prices.

Lankton acknowledged the considerable investment in the copper foil business, crediting Straubel with the foresight to pause that segment when necessary. He noted this adaptability sets Redwood apart from its peers. In contrast, Northvolt, a European battery recycling startup, recently declared bankruptcy after exhausting $15 billion in funding, underscoring the risks within this sector.

Despite the broader challenges in the battery recycling industry, Redwood may find itself well-positioned due to favorable factors like the Inflation Reduction Act of 2022, which incentivizes domestic battery production, as well as tariffs that encourage local manufacturing. Being the first significant CAM producer in the U.S. appears to be a timely decision. Yet, Lankton is acutely aware that to thrive, Redwood must remain competitive globally, regardless of external incentives.

We need to prove that we can match or exceed global price points, he stated. The technical expertise required for this process is paramount. It involves hardcore particle engineering to ensure our CAM meets or surpasses the specifications expected by our customers. If we cannot deliver on these fronts, Redwoods product wont find buyers.