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Tesla co-founder JB Straubel’s battery recycling start-up is in talks to raise $700mn in a deal that would value it at almost $5bn and help fund the company’s first major plant in Nevada.
Straubel established Redwood Materials in 2017 to reshape the supply chain for electric vehicles by recycling the materials in batteries and reducing the need to mine for more of the minerals the industry needs.
Since it was founded, Redwood has been backed by major investors including asset managers T Rowe Price, Baillie Gifford and Fidelity. Several of its existing investors are set to participate in its new fundraising, according to people familiar with the matter.
After raising more than $700mn at a $3.7bn valuation in 2021, Redwood earlier this year received a conditional commitment for a $2bn loan from the US Department of Energy.
Like the loan, the new fundraising is intended to help finance Redwood’s development of a battery recycling facility near Reno, Nevada, which will turn end-of-life battery and production scrap into critical materials for use in electric vehicles.
At full capacity, the plant’s output is expected to support the production of more than 1mn electric vehicles a year, as the US market grows and President Joe Biden tries to accelerate the country’s transition to renewable energy.
People familiar with the matter cautioned that the new fundraising had yet to be finalised, but said the talks were advanced. Redwood declined to comment.
Straubel, who is credited with co-founding Tesla in 2004, a year after it was incorporated, was the carmaker’s chief technology officer for 15 years, playing key roles in helping create the company’s first powertrains and building its gigafactory. He recently joined Tesla’s board.
Biden has set a target that half of all new vehicles sold in the US will be electric by 2030. Electric vehicle sales in the US hit the 4mn mark at the end of June, according to data from consultancy Atlas Public Policy.
The sales are being driven by a combination of price cuts at the likes of Tesla and Ford, tax credits worth up to $7,500 for consumers and greater manufacturing capacity, experts say.
In December, Redwood announced a plan to develop its next facility of more than 600 acres near Charleston, South Carolina, including a $3.5bn investment.
The group’s existing investors also include Breakthrough Energy Ventures, Goldman Sachs and Amazon’s Climate Pledge Fund.