I believe that the trend of globalization being replaced by onshoring is undeniable. But, it’s one thing to identify a trend and another to profit from it which gets to my central question for companies restructuring the battery supply chain: If they build it, will customers come?
In the case of Redwood Materials (last valued at $3.7B in 2021), the company’s latest announcement suggests that the answer is yes.
Redwood 101
Redwood describes their business as combining “recycling, refining and remanufacturing to produce and return battery materials to US battery cell manufacturers.” Their goal is to convert the current global battery logistic mess of geologic mining, anode copper foil and cathode production into a vertically-integrated process within the US. Redwood is completing an aggressive year of construction in Nevada, in what is likely to be a decade of investments aimed at a more efficient, localized approach to battery production.
Earlier than expected expansion announcement
Since Redwood doesn’t report financial results, it’s difficult to get a read on how the business is tracking in the near-term. This leaves me reading between the lines of JB Straubel’s commentary at both industry events and in the company’s press releases.
A recent announcement of Redwood’s new campus in Charleston, SC, caught my attention because it landed about a year earlier than I was expecting. The company is currently building a large recycling and cathode production campus in Sparks, NV, which will complete its first phase by the end of 2023. I had previously thought that Sparks would supply the company’s customer backlog from now until 2025. However, the more recent announcement that Charleston construction will begin at the end of Q1 2023 with production starting by the end of 2023 leads me believe that customer engagement, including that of Panasonic, is favorable.
Long-term, what’s most important about the Charleston is the expansion potential. The site is 608 acres which is 3.5x bigger than the 175 acres at Sparks. Said another way, Sparks will max out production at 100 GWh annually and Charleston will eventually be several times larger. In theory, over the next couple decades, Charleston will supply the battery belt which runs from Michigan to South Carolina as Sparks will offer supply West of the Mississippi.