Tesla co-founder JB Straubel, founder and CEO of battery recycling agency Redwood Supplies, has excellent news and dangerous information for individuals who consider electrical automobile gross sales are primed to take off. 

Straubel says demand is selecting up, however the auto business is not shifting quick sufficient to verify manufacturing will be capable to sustain.

“That is catching individuals a bit off-guard,” Straubel informed CNBC throughout an interview on TechCheck.  “It is a actually robust shift. All the best way from inner combustion gross sales dropping to EV gross sales rising by nearly 100% in numerous areas.”

Straubel says business gross sales estimates predicting EVs will account for 12.7% of all U.S. auto gross sales by 2025 could also be too low. “In case you take a look at how briskly adoption is rising in components of Europe and different components of the world, I feel it factors a path to probably even larger percentages than that by mid-decade” he stated.

That demand is why Redwood Supplies is spending $1 billion to construct a brand new plant in McCarran, Nev., he stated.  When it is accomplished later this yr, the power will produce anode copper foil that is utilized by Panasonic to fabricate battery cells that may finally go into battery packs manufactured on the Tesla Gigafactory in Nevada.

Redwood Supplies estimates the plant, which can finally make use of greater than 500 individuals, will produce sufficient anode copper foil to produce 1 million EVs yearly. The corporate says its plant would be the first within the U.S. to produce anode copper foil with many of the provide presently being imported from Asia, primarily China and South Korea.

As automakers ramp-up manufacturing of electrical autos, plans for lithium-ion battery manufacturing have skyrocketed. Final yr, the worldwide capability for lithium-ion battery manufacturing was 713 gigawatt hours, in response to AlixPartners an automotive business consulting agency. By 2025, AlixPartners expects that quantity to triple to 2,273 gigawatt hours, with U.S. EV battery manufacturing greater than quadrupling.

With a lot capability approaching line, the standard knowledge is the price of battery cells and battery packs will drop in worth, which might assist decrease the worth of EVs and enhance revenue. 

ESource, a consulting agency primarily based in Boulder, Colo., which tracks battery cell costs, estimates the fee per kilowatt hour of an automotive battery cell will drop from $147 in 2022 to $98 by 2025.  Whereas these projections are encouraging, falling costs are contingent upon the battery provide chain rising and with the ability to assist stronger demand.   

“With such a excessive degree of battery demand anticipated over the following decade or so,  the uncooked supplies that go into these batteries are probably going to be briefly provide,” Stephen Brown, a senior director at Fitch Scores.

Straubel will not be satisfied the EV battery business will probably be prepared.

“There completely is a threat that we might see a repeat of the semiconductor kind of shortages that may cut back and hamper EV progress,” he stated.

Standing subsequent to the framework for a plant Redwood hopes to have in operation quickly, Straubel admits his firm is in a race to meet up with the transition from gasoline powered to battery powered autos. 

“We’re working twenty four-seven, actually across the clock, constructing services just like the one behind us to make that offer chain occur and to try to get forward of that bottleneck earlier than it occurs,” he stated.

CNBC’s Meghan Reeder contributed to this text