Tesla Co-Founder JB Straubel on his climate startup Redwood Materials | TechCrunch Disrupt 2023

Introduction (00:00:00)

• JB Straubel, former CTO of Tesla for 15 years, is now the founder and CEO of Redwood Materials, a company that recycles old electronics into new materials for batteries for EVs.
• He is also a director on Tesla's board.

How do you think of yourself (00:01:07)

• JB Straubel considers himself an engineer first and foremost.
• He enjoys tinkering and finds it to be his happiest place.
• He is also an entrepreneur, but he is driven by the desire to have an impact and make a change in the world rather than the business aspects of it.

How many engineers are in the audience today (00:01:54)

• JB Straubel identifies with the engineers in the audience.

Do you have time to Tinker (00:03:07)

• JB Straubel makes time to tinker despite his busy schedule.
• He sees tinkering as a way to de-stress and recenter himself.

Projects in your garage (00:03:36)

• JB Straubel is currently working on rewiring his house to make it completely off-grid.
• He finds this project fun and relaxing.

Rewiring and batteries (00:04:14)

• JB Straubel is not a big fan of second-life applications for batteries.
• He is using old recycled batteries for his current project.
• He loves batteries and they are scattered around his property.

Crypto mining (00:04:49)

• JB Straubel experimented with using old batteries for crypto mining but it is not a major focus for him.

Tesla (00:05:02)

• JB Straubel still feels a strong connection to Tesla and the team.
• He was involved in a number of projects during his time at Tesla.
• Tesla is still a big part of his identity.

Did Elon make the call (00:06:08)

• Elon Musk and JB Straubel have a good relationship and he considers Elon a friend.
• The decision to join the board was mutual and involved other board members and shareholders.
• JB Straubel feels honored to be able to provide perspective and guidance to the board.

Was it a hard decision (00:07:11)

• JB Straubel took the decision to join the board seriously and did not take it lightly.
• He feels that his time away from Tesla has given him more independence and separation from the day-to-day operations.
• He believes that the value of a board is often in more difficult times and being there as a backstop if needed.

The value a board can have (00:08:25)

• JB Straubel sees his role as a Tesla board member as providing technical expertise and serving as a sounding board for Elon Musk.

Having to say no to Elon (00:08:45)

• As a Tesla board member, JB Straubel has a fiduciary responsibility to shareholders, which may sometimes require him to disagree with Elon Musk.
• Despite occasional differences, Straubel and Musk are generally well-aligned in their decisions.

yin and yang (00:09:34)

• Straubel attributes their alignment to their shared focus on technical fundamentals and data-driven decision-making.
• He approaches decisions rationally and logically, based on data and engineering principles, rather than emotions or qualitative factors.

relying on data (00:10:20)

• Straubel believes in using data to convince others of the value of decisions, both at Tesla and Redwood Materials.
• He emphasizes a culture grounded in data, engineering, and the mission of the company.

is Redwood a startup (00:11:13)

• Despite its multi-billion dollar valuation, Straubel considers Redwood Materials a startup.
• He cites metrics such as revenue, execution of long-term plans, and the need for ongoing changes as reasons for this classification.
• Redwood lacks the stability and established systems of a long-standing company.
• Redwood Materials has around 700-800 employees.
• Straubel believes it's important for companies to maintain a startup mindset regardless of their size.
• The psyche of being a startup company is crucial and cannot be simulated.
• It's difficult to simulate a startup culture within a large company.
• Many large companies try to create startup cultures, but it's challenging due to the support infrastructure and priority structure of the parent company.
• Redwood Materials recently raised $1 billion.

why not IPO (00:15:05)

• Redwood Materials is not ready for an IPO because it lacks predictability, which is necessary for analysts to build models.
• Straubel misses having access to retail investment enthusiasm, which is one of the biggest downsides of not being public.
• Straubel is surprised by the number of people who understand and get Redwood Materials' mission.

Tesla connection (00:17:21)

• Straubel hopes that people's interest in Redwood Materials is due to a greater understanding of its mission rather than just general enthusiasm for Tesla.
• Straubel believes that Redwood Materials' mission is relatable and understandable, as it involves taking apart old batteries to make new ones.
• Straubel frequently received questions about battery recycling at Tesla, indicating that people are concerned about the environmental impact of EVs.

Recycled batteries (00:18:48)

• The number of EV batteries coming into a second life or needing to be recycled is ramping up quickly.
• The motivation for focusing on battery recycling is to create a sustainable closed-loop system for EVs.
• The goal is to build a reprocessing and remanufacturing industry that uses renewable energy to reclaim materials from end-of-life batteries.

IPO (00:20:19)

• Redwood Materials may consider an IPO in the future, but it is not a primary goal.
• The company requires a lot of capital to scale its operations, and an IPO could provide access to additional funding.
• Redwood Materials prefers to work efficiently with large-scale private investors, which may delay the financial benefits of going public.

Capacity (00:22:00)

• Redwood Materials currently recycles around 10 to 15 gigawatt hours of batteries per year.
• Compared to the projected manufacturing capacity of over a thousand gigawatt hours per year in the US, Redwood's capacity is still relatively small.
• The company acknowledges that its financial resources may seem significant, but they are not sufficient to address the vast scale of the battery recycling industry and the problem it aims to solve.

Supply chain (00:23:26)

• Redwood Materials aims to handle a significant portion of the battery recycling and supply chain for the US, but acknowledges that it will likely not be the majority player.
• The US Inflation Reduction Act has driven new battery factory announcements, but the supply chain for components is lagging behind.
• Redwood Materials' current market share is estimated to be around 25-30%, and it faces challenges in scaling up quickly enough to reach a 30% market share.

Expanding into Europe (00:24:38)

• Redwood Materials' goal is to reach a production capacity of around 300 to 500 gigawatt hours per year by 2030-2035 to achieve a 30% market share.
• The company plans to achieve this through its two main campuses in Northern Nevada and South Carolina.
• Redwood Materials emphasizes the challenges of scaling up production, including the need for more people, capital, and organization to engineer and build projects at large scales.
• The company expresses concern about the time it will take to achieve the necessary scale to have a relevant market share, despite the rapid growth of the industry.

Scaling (00:26:30)

• Redwood Materials is not concerned about demand for its products.
• The biggest challenge to scaling is the complexity of ramping up production.
• Redwood Materials is the only company in North America producing battery copper foil.

Competitors (00:28:12)

• Redwood Materials is aware that it will have competitors in the future.
• Most companies are still trying to figure out who their competitors will be.
• Redwood Materials believes that some battery materials will still need to be imported for the foreseeable future.

Partnerships (00:29:16)

• Redwood Materials has partnered with Amazon, Ford, Panasonic, and is in talks with Apple.
• Working with large companies can be challenging due to their size, multiple priorities, and the need to maintain predictability and deliver consistent results.
• It is difficult for large companies to redirect resources and focus on new projects, even if they have ambitious goals.
• Crises that directly affect a company's business model or financial performance receive quicker responses compared to long-term issues like climate change.

Climate Crisis (00:31:40)

• Straubel believes there is a climate crisis and that it is more acute and challenging to change than most people realize.
• The climate crisis does not directly disrupt the business models of many companies, so it does not receive the same level of immediate attention as crises that directly affect their financial performance.

Material Shortage (00:33:05)

• Finite amount of raw materials could create a bottleneck in the transition to EVs.
• Material shortage may not manifest as a shortage but rather as cost pressure on raw materials, leading to volatile battery pricing and discouraging customers.
• Supply chain constraints can cause price spikes or prevent prices from falling as expected.
• Batteries do not follow Moore's Law, which is related to the density of transistors in mechanical and electrical manufacturing processes.
• Battery improvement is limited by the chemistry of the elements involved.
• Reusing materials multiple times is the biggest lever to reduce battery costs in the long term.
• Material cost can be 50-70% of the total battery cost, making reuse economically significant.
• Reprocessing batteries uses a lot of water.
• Life cycle analysis shows that reprocessing uses significantly fewer resources compared to mining pathways.
• Reprocessing can reduce CO2 emissions by 80%, net energy consumption by 80%, and water consumption by 60-70%.
• Despite environmental benefits, the cost, availability, and scarcity of materials currently outweigh the environmental benefits of recycling.

Design Principles (00:37:44)

• Redwood Materials has fundamental design principles that guide their engineering and design processes.
• They prioritize sustainability, net energy input, water input, and other necessary inputs when developing solutions.
• These principles have shaped the various processes Redwood Materials has invented.