JB Straubel’s Redwood Materials has restricted the locations of its new battery recycling plant to Europe. Germany and Scandinavia are the first two countries on the company’s list.
Advantages of Redwood Germany materials
Germany would be a good location for Redwood Materials’ battery recycling plant in Europe. The company already has deals with Tesla and Volkswagen, so a plant in Germany would be ideal. Tesla Giga Berlin could benefit from a nearby Redwood Materials battery factory. Volkswagen also has an automobile plant in Wolfsburg.
In July, Redwood Materials signed a partnership agreement with Volkswagen Group of America to recycle batteries from VW and Audi electric vehicles. The battery recycling company could enter into another partnership with Volkswagen for its cars in Europe.
Disadvantages of Redwood Germany Materials
Handelsblatt Sources familiar with Redwood Materials’ processes said the company is ready to invest around $1 billion in its new battery recycling plant in Europe. From a business perspective, a factory in Germany would be a symbol of power.
However, Germany has high energy costs which could significantly increase the plant’s electricity costs. According Trade economy, electricity prices in Germany hit a record high in August 2022 at €699.44 per MWh ($693.77 per MWh). The ongoing war between Ukraine and Russia has contributed to higher electricity prices in Germany.
“Energy costs are a big issue for many companies looking to invest,” said Stefan Di Bitonto, an automotive expert with Germany Trade and Invest (GTAI).
Recycling battery materials is energy intensive, so the cost of electricity would be a big factor in Redwood Materials’ final decision. The battery recycling company wants to help lower the prices of electric vehicles by localizing the global battery supply chain. To achieve its goal, Redwood Materials must build a profitable factory, or at least use sustainable solutions like solar power and batteries to optimize its energy costs.
Scandinavia versus Germany
Another factor that JB Straubel might consider is the carbon footprint of the EU factory. From this point of view, Scandinavian countries, such as Norway and Sweden, could be the right choice. Scandinavian countries lean more towards renewable energy sources, such as hydroelectricity or wind power. In addition, electricity prices in Norway and Sweden are cheaper than in Germany.
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