Toyota is turning to startup Redwood Materials for critical battery materials

Battery cells produced at Toyota’s future North American EV factory will someday contain a little Redwood Materials DNA.

The two companies announced Thursday that Redwood Materials will supply Toyota with cathode material and anode copper foil for battery cells produced at the automaker’s $13.9 billion factory in North Carolina that’s slated to go into production in 2025. The deal is valuable to Redwood. But it’s also a win for Toyota, which now has a U.S. source for two critical components that account for the majority of the cost of a battery cell and are manufactured entirely overseas.

While Redwood and Toyota didn’t disclose the terms of the agreement, it likely parallels a similar deal with Panasonic that is worth several billion dollars.

The deal marks an expansion of a partnership between Redwood Materials and Toyota that was announced in June 2022. Under that initial partnership, Redwood Materials agreed to refurbish or recycle batteries from Toyota’s hybrid and electrified vehicles. For batteries that can’t be refurbished, Redwood pulls out materials such as copper, lithium, cobalt and nickel and then remanufactures those materials into components that can be returned to Toyota for cell manufacturing.

The effort was announced as the first batch of Toyota Prius vehicles that were released 20 years ago, retired from the road. And it will only grow. Toyota’s battery lifecycle ecosystem is forecast to include the recycling, remanufacturing and repurposing of the nearly five million operating units, according to the automaker.

This latest deal ups the ante — and the value — for Redwood Materials, a lithium-ion battery recycling and materials startup founded by former Tesla CTO JB Straubel. Under a long-term agreement, Redwood will now supply cathode active material and copper foil produced at its U.S. facilities. The cathode materials supplied to Toyota at its North Carolina factory will include a minimum of 20% recycled nickel, 20% recycled lithium, and 50% recycled cobalt as well as 100% recycled copper in the anode copper foil.

Lithium-ion batteries contain three critical building blocks. There are two electrodes, an anode (negative) on one side and a cathode (positive) on the other. Typically, an electrolyte sits in the middle and acts as the courier to move ions between the electrodes when charging and discharging. Cathode foils, which account for more than half the cost of a battery cell, contain lithium, nickel and cobalt. Redwood is able to capture all of those materials through its battery recycling and processing.

Redwood continues to expand its Carson City, Nevada headquarters and is expected to break ground on a second battery materials campus in South Carolina later this year.  Both campuses will recycle, refine, and manufacture battery materials, aiming to scale production of components at a projected volume of 100 gigawatt-hour per year’s worth of materials, enough for one million electric vehicles by 2025.