- JB Straubel stepped down as Tesla’s CTO in 2019.
- He’s now focused on Redwood Materials, where he has the CEO title for the first time.
- Redwood is a recycling startup that wants to create a “remanufacturing economy,” extracting the valuable raw materials from spent electric-car batteries so that lithium, cobalt, and other valuable minerals don’t have to be mined at great expense.
- “I’m having a blast building the team and scaling our technology,” said Straubel.
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When JB Straubel announced last year that he was leaving Tesla, investors put forth a chorus of concern. Employee No. 5 had been with the automaker since 2004, when pretty much nobody had heard of the electric-car startup, or of Elon Musk.
Musk and Tesla are now of course household names. The CEO deserves much of the credit: He hasn’t just been ahead of the curve with the 17-year-old electric carmaker. He has been the curve, envisioning the future of transportation and charting the path to get there.
But on Tesla’s ascent, the company’s true tech whiz kid was Jeffrey Brian “JB” Straubel. Hired as an engineer, he took on the unofficial job of drawing the curve that Musk saw in his head. Of creating the cars, powertrains, batteries, storage systems, and even entire factories that fueled the expansion of Tesla’s operations and ambitions.
Straubel is a low-key presence, but whenever his voice emerged during one of Tesla’s quarterly earnings calls with Wall Street analysts, experienced listeners paid extra attention. Straubel spent every day in the trenches, building the world’s first viable all-electric carmaker. And he was very good at it.
Then, he decided to leave. Not to launch a rival to Tesla, as other former Musk allies have done, but to build a company that could help realize Musk’s dream of obliterating the gas-powered car — and make a fair bit of money while doing it.
A new challenge, and a vision, for a better future
Nearly two decades of growing Tesla from a scrappy startup to a major player had provided Straubel enough success. He would remain in an advisory position with Tesla, but devote the bulk of his energy and ingenuity to a fresh challenge: recycling electronic waste — especially electric-car batteries — and returning them to production.
“It seems blindingly obvious to me,” Straubel, who is 44, said of this kind of “remanufacturing,” the goal of Nevada-based Redwood Materials, the company he founded and now helms as CEO.
Redwood isn’t exactly in the most dramatic part of the business of EVs or consumer electronics. But Straubel thinks swift growth could be part of a more thoroughly electrified future.
“A huge missing piece of the remanufacturing economy is how all the batteries and materials get unmanufactured and are looped back into the supply chain,” he said. “It could be a massive, massive industry.”
And how huge is that missing piece?
“I’m entirely certain we will have 90% of materials coming from old batteries,” he said.
He might be onto something. The global battery-recycling market could nearly double by 2025, to $23 billion from about $17 billion today, according to Research and Markets. Elements such as lithium — key to the lithium-ion batteries that power laptops, smartphones, and electric cars — and cobalt are expected to be in high demand as China, Europe, and even the US take steps to retire the internal-combustion engine and the developing world acquires more consumer technologies.
The amount of material needed to fuel that demand, Straubel said, is staggering.
With battery demand set to skyrocket, attention turns to raw materials
He’s right too. Research firm Roskill figures that rechargeable batteries, including the very large ones used for EVs, account for 54% of the total battery market.
Global demand for lithium could cross the million-ton threshold by 2027, followed by an 18% annual growth rate through 2030. The needed material could be mined from the earth, at great cost, or reclaimed from existing batteries.
Demand is set to take off.
“The electric vehicles are coming,” Lea Malloy, the head of research and development at Cox Automotive Mobility, said.
She and her colleagues estimate that 28 million electrified vehicles could arrive by 2030. And they’ve scrutinized what she termed an “unintended consequence” of that surge.
“There could be a million spent EV batteries in the US alone,” she said.
All those used batteries contain rare-earth elements, and that’s got every company that wants to make EVs thinking about how to manage their battery supply chains.
Tesla recently announced a new battery design that could offer improved energy storage, reduce cost, and eventually lessen reliance on cobalt. General Motors’ new Ultium battery technology is also aiming for a cobalt-free offering. So concerns about the essential elements required to power a forthcoming global fleet of EVs is making all the players think about raw materials.
This insight isn’t a new thing for Straubel. He started Redwood in 2017 because he was passionate about recycling and soon realized the scale of the business opportunity. Tesla was ramping up production of its Model 3 sedan at the time, and Straubel witnessed firsthand just how many new EV batteries were on their way to becoming old EV batteries.
Investors did too. This year Redwood secured a $40 million funding round from Canadian financier Jeffrey Skoll’s Capricorn Investment Group and Breakthrough Energy Ventures, backed by Jeff Bezos and Bill Gates.
In 2019, Redwood struck a deal with Panasonic to recycle scrap that Panasonic generates at the gigafactory it operates with Tesla, near Reno. The startup also got in on Amazon’s $2 billion Climate Pledge Fund, recycling products for the e-commerce giant.
“Amazon is perhaps the most significant company in the world in terms of logistics and supply chain,” Straubel said. “I thought it would be important for us to build a partnership with them, and we started talking about a year ago. Our vision fits into their sustainability goals.”
Growing as fast as it can
Redwood has been under the radar for the past few years, but that’s about to change.
Next year Straubel expects to raise the headcount to 200 from about 60, propelled by that funding and by the expectation that a world with many more EVs is going to need many more batteries.
“I’m having a blast building the team and scaling our technology,” said Straubel, who for the first time in his career bears the CEO title.
“We’re growing extremely quickly,” he added. “We’ve almost been surprised at how many opportunities we’ve had so early.”
Early days, but with a master plan
Straubel is clearly delighted to be at the helm of a small, nimble company again, with plenty of problems to solve rather than processes to perfect. Borrowing some lingo from Tesla, he characterized Redwood as being in the “Roadster or pre-Roadster days,” referring to Tesla’s first vehicle, launched in 2006.
“This is the time to start inventing technology,” he said. “We’re not yet overwhelmed by a tsunami of waste EV batteries. We’re a few years ahead of it, and that’s a good place for us. This is something I feel is an incredibly important problem, and I’m excited to create the change.”
Redwood could also become part of a dynamic new industry as it takes on established recyclers.
“Ultimately, I don’t think the endgame is going to be defined by one player,” Cox Mobility’s Malloy said. “It’s going to have to be a system.”
Straubel’s history with Tesla does raise a question, however. Would he keep Redwood independent? Tesla’s vertiginous finances saw the company flirt with collapse several times, but investors who jumped on the 2010 IPO have enjoyed a stunning return of over 9,000%, and along the way companies such as Toyota and Daimler have taken lucrative stakes.
At one point Google was reportedly thinking about buying Tesla outright.
“We will have a lot of options,” Straubel said of the company’s growth.
“But I have zero desire to sell the company or be inhaled by someone. I’m excited to build something, and this is what I want to do with my time.”