Tesla co-founder is considering building a battery recycling plant in Germany, Redwood Materials.
One billion dollar investment: JB Straubel and his company Redwood are looking for proximity to German car companies. But because of the high energy prices, Scandinavia could win the race.
After Elon Musk, one of his long-time companions could soon invest in Germany. JB Straubel, the fifth employee of Tesla and long-standing head of technology, is examining the establishment of a production facility in Europe with his start-up Redwood Materials, which specializes in battery recycling.
A German location is one of the favorites, as the Handelsblatt has learned from three people familiar with the processes.
Investment volume: around one billion dollars. For Germany, the investment would also have symbolic power. Battery recycling is considered crucial for the long-term success of electromobility and Redwood is one of the pioneers. Volkswagen had recently agreed on a partnership with the company in the USA.
However, the investment could fail due to the high energy costs in Germany. Therefore, it could also come down to a Scandinavian location, as it is called in the circles. The recycling process is very energy-intensive. Per year, the higher electricity prices in Germany could cause a nine- to ten-digit amount of additional costs.
Stefan Di Bitonto, automotive expert at Germany Trade and Invest (GTAI), which advises numerous companies that are considering investing in Germany, said:
Energy costs are a big issue for many companies willing to invest.
The location expert reports of high “pressure in the boiler”, only recently a company managed by GTAI had cancelled an investment project in this country because of the high energy costs.
Schleswig-Holstein, Mecklenburg-Western Pomerania and Saxony
At the beginning of the year, Straubel announced the construction of at least two factories for recycling and battery material production in Europe. The plants should be built as close as possible to existing car and battery factories, he told der Spiegel, naming Scandinavia, Great Britain and Eastern Europe as well as Germany as an option.
Redwood wants to decide according to the current plan this fall. According to the insiders, who want to remain anonymous, the search has now narrowed significantly.
Favorites are a location in Scandinavia, for example in central or northern Sweden, as well as the northeast of Germany. The wind power capacities in Schleswig-Holstein, Mecklenburg-Western Pomerania and in the direction of Saxony made the federal states attractive.
Car plants such as Volkswagen in Wolfsburg or Tesla in Grünheide near Berlin are also nearby. In addition, there are new battery plants from CATL near Erfurt or Northvolt in Schleswig-Holstein.
However, the recycling of battery materials is particularly energy-intensive, and electricity costs in Germany are significantly higher than in Sweden, for example.
Energy prices have long been cited by companies as a competitive disadvantage. Since the Ukraine war and the gas supply freeze from Russia, the difference with Scandinavia has become even greater.
Redwood declined to comment on the search process when asked by Handelsblatt.
What counts: Green energy and subsidies
The reduction of the CO2 footprint is particularly important to Straubel and part of the company philosophy. With regard to photovoltaic capacity, a location in Spain was initially discussed. France failed because of the high share of nuclear power, Poland because of coal-fired power generation.
Wind power exists in northeastern Germany, and the state levels have also been very supportive here, according to the insiders. The problem, however, is that compared to the electricity generated by hydropower in Norway and in central and northern Sweden, electricity in Germany is very expensive.
Tesla-Mitgründer prüft Aufbau eines Batterierecycling-Werkes in Deutschland, September 9, 2022
