Redwood Supplies has attained a $2 billion mortgage dedication from the Division of Vitality, the company introduced on Thursday by way of its mortgage applications workplace.

The battery-recycling startup will use the funding to construct and increase its battery recycling facility exterior of Reno, Nevada. The power takes end-of-life electrical automobile batteries and automotive manufacturing scrap, processes these, and churns out uncooked supplies and merchandise which are used to make new EV battery cells, particularly anode copper foil and cathode-active supplies. 

Redwood Supplies was based by former Tesla CTO and cofounder JB Straubel in 2017 throughout his tenure at Elon Musk’s automobile firm.

Straubel left Tesla to run Redwood Supplies full-time in 2019, and several other former Tesla staff have joined him there together with COO Kevin Kassekert, who beforehand labored as a vice chairman of individuals and locations at Tesla.

As CNBC beforehand reported, final yr Redwood Supplies struck a multi-billion greenback take care of Tesla provider Panasonic.

“These are very capital-intensive initiatives, and we’re in a contest with Asia to ramp this up and to deliver these provide chains and manufacturing operations again to the US,” mentioned Straubel on CNBC’s The Trade on Thursday.

He added, “The US battery demand and EV demand is rising…however we’ve a good distance earlier than that offer chain is predominantly moved to the US.”

The Director of the DOE’s Mortgage Packages Workplace, Jigar Shah, wrote in a put up in regards to the new mortgage dedication:

“With the intention to meet the wants of the quickly rising EV market, the US might want to increase battery recycling capabilities, in addition to develop our home capability for producing battery precursor supplies. By reducing the price of the crucial supplies for lithium-ion batteries utilizing recycled supplies, electrical automobiles can change into extra accessible to decrease revenue communities.”

With the goal of reducing greenhouse fuel emissions over the subsequent decade, President Joe Biden pushed for and signed the $430 billion U.S. Inflation Discount Act (IRA) in August 2022. The DOE’s new mortgage to Redwood Supplies is available in half from that legislation, which has thus far resulted in additional than 100,000 new inexperienced jobs being introduced.

The DOE says it appropriated $55 billion in new estimated mortgage authority for its Superior Expertise Automobiles Manufacturing program by the IRA. This identical program as soon as helped Tesla get its begin — and Tesla repaid their mortgage early and grew right into a juggernaut, in sharp distinction with cleantech firms that fizzled like Solyndra, for instance.

Redwood Supplies has a pilot line up and working for manufacturing of anode copper foil in Nevada already. It’s aiming to help the manufacturing of greater than 1 million EVs per yr, the DOE mentioned in its put up, which might assist drivers keep away from an estimated 3.5 million tons of CO2 and different tailpipe emissions, yearly.

Whereas Tesla might have been the birthplace of Redwood Supplies, and a accomplice of the corporate in the present day, it might compete with the recyclers on expertise finally. In its 2022 annual monetary submitting with the SEC, Tesla mentioned, “We have now agreements with third celebration battery recycling firms to recycle our battery packs and we’re additionally piloting our personal recycling expertise.”