Redwood Materials plans to build two battery recycling factories in Europe. Selecting where to build them requires balancing several criteria. Being near battery manufacturing facilities that would be the principal customers for its recycled battery materials is one. Proximity to EV manufacturers and access to national and local incentives are two others.
There is another factor, however, and it may be more important than all the others — access to low cost electricity from renewable sources. Battery recycling is an energy intensive enterprise. Redwood has already dismissed France and Poland from consideration because France gets most of its electricity from nuclear generating stations and Poland relies heavily on coal for its electricity.
According to Handelsblatt, several sources familiar with the search report that Germany meets many of the company’s criteria. It, of course, is ground zero for the European automotive manufacturing business with Volkswagen, Mercedes, BWM, and Tesla all building electric cars as fast as possible.
But the cost of electricity in Germany is significantly higher than it is in Sweden and Norway, both of which have abundant supplies of low cost hydro power. Building in Germany instead of Scandinavia could add millions of dollars a year to Redwood’s operating expenses. But Norway may be too far away from Redwood’s customers and Sweden, knowing its low cost electricity is a powerful draw for major businesses like Redwood Materials, is less inclined to offer significant financial incentives. Still, Northvolt is in Sweden and its CEO is Peter Carlsson. Both he and Redwood’s CEO JB Straubel are former Tesla employees who have worked closely together in the past.
Electrive reports that a site in northeastern Germany is one of Redwood’s favorite locations. Schleswig-Holstein and Mecklenburg-Western Pomerania are close to several several German automakers, including the new Tesla factory in Grünhiede and the newest CATL battery factory. Saxony is near several Volkswagen Group factories. All three German states have significant wind power resources. The Volkswagen factory in Zwickau, for instance, sources all its electricity from renewables and Volkswagen has already entered into an agreement with Redwood Materials in the US.
Redwood Materials has opened a small office in the German town of Mannheim, where former BASF manager Dirk Demuth will lead the European expansion program. According to reports, the company expects to make a final decision on the location of its first battery recycling facility in Europe, which is expected to cost about $1 billion, this fall. It is now weighing the final cost estimates for various locations before a final decision is made.
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