Redwood Materials: Former Tesla exec’s battery recycling company nets $105.6 M in tax breaks.
Nevada Governor’s Office of Economic Development approves tax incentives for Redwood Materials in exchange for investing more than $1.1 billion in Storey County.
A battery company started by a former Tesla executive was approved for more than $105.6 million in tax incentives for its massive battery recycling and materials facility in Northern Nevada.
Redwood Materials was awarded tax credits and multiple abatements by the state of Nevada in exchange for $1.1 billion in capital investments at its Storey County facility. The incentives were approved by members of the Nevada Governor’s Office of Economic Development board during their Dec. 1 meeting.
Redwood Materials is the first company to receive a new incentive for projects that invest $1 billion or more in the state. The incentive was originally created for the Faraday Future startup, whose plans for a major project in Nevada ultimately did not pan out.
In contrast, Redwood Materials already has a proven track record, according to Gov. Steve Sisolak. The Nevada governor, who was presiding over his last GOED meeting, noted that he has visited Redwood Materials facilities twice and liked what he saw.
Steve Sisolak, Gov., said:
It’s an absolutely amazing operation.
“We’re going to put a lot of people to work and relieve some of our dependence from foreign supply chains.”
“It’s an absolutely amazing operation,” Sisolak said. “We’re going to put a lot of people to work and relieve some of our dependence from foreign supply chains.”
Redwood Materials received the following incentives from the state, according to documents obtained by the Reno Gazette Journal:
- Sales and use tax abatement: This is an abatement on qualified purchase of capital equipment. Redwood Materials will receive up to a 100% abatement on local sales tax for 15 years, equating to just under $46.6 million in incentives. This results in an adjusted overall state and local sales and use tax rate of 2.75%.
- Modified business tax abatement: An abatement related to wages. Redwood will receive a 75% abatement for 10 years, amounting to just under $2.8 million in incentives.
- Personal and real property tax abatements: An abatement of 75% over 10 years equalling $54.1 million in incentives.
- Transferable tax credits: A credit of $9,500 per qualified employee through June 30, 2025. These are credits that can also be traded or sold to other entities, typically to lower their tax bill.
Redwood Materials’ application for incentives was supported by the Economic Development Authority of Western Nevada.
Nancy McCormick, senior vice president of business retention, expansion and workforce development for EDAWN, said:
These incentives are necessary for Nevada to compete with other locations for this large-scale project, which has gained national and international attention and interest.
“Redwood plans to grow throughout the world and this presents Nevada with a unique opportunity to grow and retain their presence here.”
A financial impact analysis submitted as part of Redwood Materials’ application also estimated that the project will generate 701 jobs — 225 of which will be created by June 30, 2025 — at an average wage of $32 per hour.
The Redwood Materials project is also expected to generate more than $106 million in direct local and state tax net revenue as well as indirect tax revenue of $77.3 million. The total economic impact from the project is expected to total $5.6 billion over two decades.
JB Straubel, Redwood Materials CEO and founder, also noted existing partnerships with Panasonic as well as established manufacturers such as Volkswagen, Audi, Toyota and Ford in the company’s application for incentives.
JB Straubel, Redwood Materials CEO and founder said:
By offering the first large-scale domestic sources of these battery materials that can go directly to U.S. battery manufacturers, Redwood Materials will be making Nevada a significant supplier of critical minerals for the nation.
The ability to provide more battery materials from within the United States is especially important due to its implications, not just for the industry but for national security, said Michael Brown, executive director of GOED. It’s a big reason why the company has “strong support” from the U.S. Department of Energy, Brown added.
Many of the minerals needed for electric batteries, for example, come from overseas, including conflict spots such as the Congo, according to Brown. A lot of the materials and supplies needed also come from outside the United States — something that Redwood Materials aims to rectify to help close the “supply chain loop” for batteries domestically.
Once fully up and running, Redwood Materials’ operations can supply enough materials for 1 million electric vehicles per year or about two-and-a-half Gigafactories worth of materials to the U.S. supply chain, Straubel claimed.
Nevada could especially benefit because it already has a growing ecosystem for the battery supply chain in the state, including mining, refining, production and assembly, Straubel said. Straubel called Redwood Materials the final missing piece for closing that loop.
“These components are 100% imported largely from Asia,” Straubel said. “We’re very excited to have this opportunity to potentially accelerate that supply chain and create it for the first time here in Nevada and in the United States.”
This is also not the first time that Redwood Materials has received incentives from the state. In March 2021, GOED also awarded Redwood Materials $411,599 in tax abatements over 10 years for expanding its Carson City recycling and processing facility.
At the time, GOED projected that Redwood would create 109 new jobs within the first five years of expanding its facility and generate $3.7 million in tax revenue over a decade. The company also pledged to invest $5.1 million in capital equipment.
Since then, Redwood Materials has doubled down on Northern Nevada by announcing a massive battery materials facility at the Tahoe Reno Industrial Center in Storey County east of Reno-Sparks. It is the same industrial park where Tesla’s first Gigafactory is located.
“It’s a very business-friendly climate politically and economically and there’s generally more space to grow,” Straubel told the Reno Gazette Journal at the time.
“You could also build a company a little bit faster and do so without some of the constraints … you have in California or other places like that.”
After initially breaking ground on 100 acres in June 2021 at the Tahoe Reno Industrial Center, Redwood Materials acquired an additional 75 acres last year, growing its footprint in the industrial park to 175 acres.
In response to some questions from the GOED board about the company and the project, Straubel responded that he is personally invested in the state.
“We want to build this in Nevada,” Straubel said.
“I am personally a resident of Nevada. My children go to school here. I’m very fond of this state. I think this is the right place to do this.”
Redwood Materials: Former Tesla exec’s battery recycling company nets $105.6 M in tax breaks, December 1, 2022