Why Elon Musk’s Battery Guy Is Betting Big on Recycling

0:03J.B. Straubel has been called one of the brains behind Tesla's success. Now, he is attempting to use what many would see as trash to power the electric car revolution. Though founded just a few years ago, his company Redwood Materials is already recycling 20 gigawatt hours of lithium-ion batteries each year. That's roughly equivalent to what would be found in 250 ,000 electric cars. The elements they are pulling out of those batteries, not out of the ground, are helping the company generate cash by selling materials such as lithium and nickel back into the battery supply chain. It feels a bit like we are inventing the next generation of refineries, so to speak.

0:51Straubel speaks softly, but don't let that deceive you. He says Redwood is on track for about$200 million in revenue this year. And he imagines a day when all electric cars are running on recycled batteries. And recycled batteries are supplying materials that go into everything in our lives. From a greatly expanded power grid to every consumer gadget in our homes. Appliances, power tools, our cell phones. In that future, he sees a world where humanity no longer has to pursue the messy, destructive process of extracting these materials from the earth. If anyone can pull this off, Straubel may be able to.

1:26He spent 15 years at Tesla, where his contributions were so great, he was considered a co-founder. He was Elon Musk's battery guy. And now he's on the company's board. While at Tesla, Straubel learned firsthand the challenges of disrupting industries. Long days, hard work, incredible optimism. Now he's applying what he learned from Elon Musk during those tough early years at Tesla. On average, I think humanity is probably underperforming a little bit versus its potential. Maybe Elon is kind of beyond the optimum at times, but I think it could be probably a positive example to really crank up the intensity for a lot of other folks.

2:10From the Wall Street Journal, I'm Christopher Mims. And I'm Tim Higgins. This is Bold Names, where you'll hear from the leaders of the bold name companies featured in the pages of the Wall Street Journal. Today, what will it take for Redwood materials to scale during a time of great uncertainty in the electric car market? And hear what J.B. Straubel learned from his time at the Elon Musk School of Management.

2:37J.B., welcome. You went from devoting your life to a consumer product with Tesla, very sexy sports cars and sedans, to the other end of the spectrum of sexy recycling. Not a typical career. Why? Or maybe put more delicately for the audience, tell us what you're doing with Redwood materials today that wasn't out there in the market when you began. Yeah, it isn't a very traditional, typical career trajectory, but I think it makes some more sense. If you think in terms of myself as an engineer, first and foremost. I love energy. I love sustainability. And I'm more of an energy nerd than I am a car nerd.

3:24And that surprises a lot of people because they reflect on the Tesla journey and immediately think that I must have done that because of the sexy consumer product and the automobile. But for me, that was really a passionate, mission-driven focus to demonstrate the technology behind electric vehicles and to do everything we could to prove to the world they could be a solution and they could become a mass market vehicle as they are today. So for me, that was really the impetus, the beginning of Tesla. And in many ways, that exact same passion and mission scales into what we're focused on at Redwood today.

4:07It's helping that ecosystem. It's finding ways to solve problems as the world electrifies and make that easier and more sustainable. What are you recycling? I mean, you're not out there picking up soda cans and taking them to the grocery store. I mean, this is a huge operation that you have in Reno. Paint a picture for me how this is operating, how this is working. Yeah, it isn't your typical kitchen garbage can recycling. So we're focused on lithium ion batteries and recycling every shape and size and type of application of lithium ion battery in the world today. And, you know, these have proliferated into pretty much every part of our lifestyle and existence.

4:52But, you know, we recycle everything from, you know, a cell phone battery or an AirPod battery to larger things like your computer or maybe a power tool or a lawnmower, but then all the way up to vehicles. And, you know, the electric vehicle batteries that are, you know, now scaling and having such an impact, you know, are also something that needs to be recycled at end of life. So that is where we really see the core growth for us. And then the final part of what we recycle is maybe even a less sexy part of the industry, but it's a lot of production scrap. And what is the bigger goal? How do you see this all working?

5:30Well, the simplest way to think about what we want to do with those materials is to make new batteries. And it seems kind of almost overly simplistic. My kids can even understand it. And to them, it makes sense that if we take an old battery, of course, we must figure out a way to make a new one out of it. In reality, there's so many steps in between that. And we are attacking that one step at a time so that we can eventually get back to equivalent types of purity of metals, these critical metals that everyone is very focused on today, lithium, nickel, cobalt, copper. And we can reintroduce those metals right alongside of mined materials and slightly reduce the pressure and the demand that we're putting on the need to mine more of those same materials as we electrify.

6:23I think you're hitting it on one of the issues here with EVs. On one hand, there's a lot of excitement for the technology because it's seen as green technology. But on the other hand, there's this, I don't know, dark side of having to dig all of these materials out of the earth. It is kind of an exciting vision. And, you know, I think it's one of the unintuitive parts of batteries and the electric transition. If you think of the very long term, all of the materials that we put into an electric vehicle and into that battery, you know, stay with the battery. They don't go anywhere. They don't get burned.

6:58They don't get, you know, sort of sent out an exhaust pipe or, you know, dropped on the road behind you. They're all still there. They're all reusable. And we can recycle and reuse those same critical elements with 95, 98 % efficiency and recovery. So, you know, it almost seems like a science fiction sort of, you know, imagining of the world in the future. But if you kind of fast forward to once we have a fleet of electric cars and once they've all kind of been mature and gone through their life cycle, you know, we won't need to continue mining those critical materials. When do you think that might be?

7:34I don't think it'll be a moment where we wake up one morning and then suddenly there's an aha moment that suddenly it's all recycled. But instead, it'll be a transition. Every single year that goes by, every month that goes by, the recycled content in the fleet of batteries is increasing. And it's going to take decades, but the scale of it is so, so big. It ends up really shifting the focus from mining of nickel and cobalt and lithium for batteries, shifting it all toward reprocessing. You know, it's interesting because a few years ago, it seemed like the world was changing overnight. It really felt like that EV revolution was occurring.

8:19But now you look at the landscape and it's not that EV sales are falling exactly. It's just that the rate of growth is not as dramatic and that kind of EV future seems to be perhaps stalling. Does that keep you up at night? Because you're making plans for a future where EVs and the electrification of kind of the world is dominant. And it's not clear that that's on the horizon anymore. You know, it may seem counterintuitive, but I almost sleep better when we're in these periods of slightly more conservative forecasting. And I get nervous almost when the exuberance feels like it runs away and gets ahead of the likely reality of the speed of a transition.

9:07And, you know, I am 100 % confident that we are headed toward a nearly complete transition of transportation and vehicles to electric. I also believe it will take a little longer than most people expect. It is a complicated transition, and I don't think it's something that can really be successfully mandated. And I think it's going to take time to create the mix of products that people really want to purchase and see value in in every segment of the market. So are you generating revenue? We are, and I've kept us very focused on building and operating business. We'll have hundreds of millions in revenue in total over 2024.

9:53And that's something I'm pretty proud of. It's an accomplishment to really do that in a difficult market and do that without a set of government incentives that are creating that revenue. J.B. Straubel says his company is generating revenue at a time of great uncertainty. Could battery recyclers like his one day replace the oil giants? Plus, why he thinks more people should be like his former boss, Elon Musk. On average, I'd say, you know, most leaders and business folks could probably work harder than they do. Stay with us.

10:41jb when you talk about your confidence in america the world making a complete transition to 100 electrification and transportation and presumably in other things right the electricity grid renewables, home appliances, ultimately industry. But as we approach that goal, what does that look like? I mean, does America become the Saudi Arabia of batteries? Do you become the ExxonMobil of the underlying materials that go into them? What kind of scale are you projecting as we make this transition? There's a lot of talk of, okay, okay, what's the growth rate of EV sales in a given quarter? But what really matters, if you're thinking about the sustainability of the vehicles in the country or in the world, is how many of them are electric?

11:39How much fuel did they actually use or how much fuel was avoided? And today, to put that in perspective, the fleet of cars in the U.S. today is about, give or take, a few, maybe a percent, about 2 % electrified, 2%. So 98 % of the vehicles are not electric or burning fossil fuels, petroleum, diesel, whatnot. So that to me is sort of the most sobering number to really give you a sense of where are we on this transition. And we're 2 % of the way there, 98 % left to go. So by any definition to me, that is just in the bare beginning because it has such a huge potential and such enormous scale as time goes by.

12:26And I do think it feels a bit like we are inventing the next generation of refineries, so to speak. I hope we don't quite have a direct comparison to an ExxonMobil in the future, but there is some commonality that we are taking these old raw materials and inventing ways to refine them into a whole selection of new products that the world needs and then building the ecosystem to do that. In some ways, that's what the petroleum companies did in the last century. So are trillion dollar companies going to be built in this space? I think it's entirely possible. You know, Tesla has touched that in the past and, you know, I think, you know, may well touch it in the future.

13:09But, you know, that's potentially, I think, one of many. If you look at the scale and size of this whole ecosystem, you know, it would clearly justify that. These materials presently are available from China, from elsewhere, where there's already a really robust mining operation. You know, I understand that that's heavily subsidized. subsidized. But given that what we need to make a transition to a carbon-free future is for everybody to get their hands on affordable EVs as fast as possible, why does it matter where those materials come from? If you zoom out a little bit on it and think of one of the key reasons that electrification is driving forward is sustainability.

13:52It's a transition from fossil fuels to more sustainable energy sources. You know, one of the reasons to do that is reducing and carbon emissions and carbon atmospheric pollution. So I think we should care to some degree about the embedded carbon and the way that we make that transition. This is kind of the concept of almost the environmental payback of an EV or a solar panel or a wind turbine. All these technologies have a similar concept, which is how long does it have to operate before it kind of recovers the cost or the emissions needed to make it in the first place. And I do think that's an important thing to keep in our mind.

14:35We've just heard how Straubel sees the world making the transition to electric vehicles. When we come back, he digs into his time at Tesla and his relationship with the world's richest man, Elon Musk. It's always easier, I think, when you're remembering the past to remember the fun times and sometimes, you know, the really difficult stuff kind of gets grayed out a bit. that's next.

15:11JB, you spent roughly 15 years at Tesla. You worked very closely with Elon Musk. and I think people, because he's so public, because he seems to kind of live his life on social media on X, they feel like they know him or they feel like they know everything about him. But you worked with him very closely. What did you learn from him about executing in business that we on the outside don't know or don't really appreciate? Yeah, it is interesting watching everyone want to be best friends with the movie star they've watched in the movie. We had an incredibly productive partnership for so many years.

15:56And I look back on it quite fondly in many times. I think maybe it's always easier, I think, when you're remembering the past to remember the fun times. And sometimes the really difficult stuff kind of gets grayed out a bit. But in total, I learned a huge amount from Elon. And we basically went through this unbelievable trial by fire of learning on the fly, building the airplane in flight, so to speak, at Tesla. I learned some incredibly important lessons. The importance of aligning a team and a company around an impactful but also a clear mission and vision is something that I think Elon does phenomenally well.

16:44It was inspiring to me. It resonated with me, and I've sort of taken that to heart going forward. I also think he does an incredible job of just rallying an intensity and a passion inside of a company and a team that's really unusual. It's uncomfortable. You know, people don't like to, you know, work insanely hard. You know, it's not the kind of natural state of most humans, but it is really rewarding when you look back on what teams can accomplish. I think they feel proud and rewarded by kind of the results of that, but it's hard in the moment. In 2023, you returned to Tesla to be on the board of directors.

17:25The board has come under criticism for how it's overseeing Musk. The journals reported about concerns of his drug use. There's been distractions with Twitter turned X. Now his embrace of U.S. politics. Yet as CEO, he has provided a great deal of value to shareholders since going to public. How do you balance your role, this new role of overseeing Musk, the CEO, yet also giving him the room he needs to be the Elon Musk that has gotten so much done to let him cook, if you will? Well, it is a challenging balance. I returned mainly because I love the mission of the company. You know, I feel this, you know, close connection to Tesla still.

18:13And, you know, it's something I'm just I'm very passionate about. I probably always will be. And I also have a close connection to a lot of the team that remains at Tesla and, you know, want to be helpful, want to be supportive in the way that I can with the time that I have available. So, you know, I am doing my best and learning, you know, how to be supportive in that more limited engagement. You know, I think one of the things I, you know, try and bring to that is, you know, a little bit more, you know, technical view on things and trying to really evaluate and, you know, just, I'd say, ask the challenging questions, you know, of the technology strategies and roadmaps and performance along the way.

18:56I enjoy that. I think that's something I can try and provide to the shareholders and value for Tesla as we go. As you watch him, you've watched him over the years. He's at Tesla. He's at SpaceX. He's got all of these other startups. Do you ever worry about him burning out or how long he can keep it going? You know now as the CEO of your own startup and also being on the board, there's only so much time in the day. There's only so much energy. What kind of concerns do you have? Well, you know, I do, I'd say, at times, you know, sort of caution or in the times when I can, you know, would give him, I don't know exactly how I would frame it.

19:47Sorry, maybe an awkward answer on that one. And, you know, I'm trying to think how I would want to answer that exactly. You know, I mean, Elon is human, like all of us, and he has an incredible, you know, tolerance for working incredibly hard, you know, and for, you know, putting an immense focus and hours into all these different projects. you know, I, you know, with my personal hat on, I do want to make sure he tries to balance that and, and doesn't burn himself out and, you know, takes at least, you know, a moment out here and there so that he can, you know, stay at kind of a peak productivity and peak value creation for, for himself and, and all the various companies.

20:36But I think, I think overall, you know, he, he does set out a pretty compelling example on this. You know, I think on average, I'd say, you know, most leaders and business folks, you know, could probably work harder than they do, you know, without burning out. So I'd say on average, you know, I think humanity is probably underperforming a little bit versus its potential. You know, maybe Elon is kind of beyond the optimum at times, but I think, you know, it could be probably a positive example to really crank up the intensity for a lot of other folks. Are you sleeping on the factory floor yet? I try and manage things so that I don't have to, but startups are intense.

21:22And you may try as you want to kind of plan a predictable course, but the outside world intervenes. And yeah, we've had some pretty intense times where it's taken kind of all hands on deck or kind of nonstop weeks of intervening and trying to get things to work that didn't work the way they should or when they should have. I like setting aggressive goals. I'm kind of an optimist by nature, I guess. So that sort of bleeds into being maybe too optimistic at times about what we can accomplish. And then that sort of bleeds into, you know, getting into challenging situations where we have to hustle to catch up and deliver.

22:06But, yeah. I'd love to hear more about why you say humanity might be, at this time in history, underperforming what it could be doing. It's easy to look back at, you know, the last great space age or something and think, wow, you know, what was it like when we were first sending people to the moon? or building railroads across the West. What do you think is the root of that? What's going on? It's hard to, I'd say, put a finger exactly on it. I used to love reading about Thomas Edison and Nikola Tesla, ironically, and kind of the dawn of the industrial age and the electric age. And it was this prolific period of invention and some of these huge systems that we rely on today hey, we're really conceived of and invented and grew so quickly 100 years ago, 150 years ago.

23:01And on one hand, you can kind of say, geez, it feels like we're maybe slowing down today. But there are certainly examples I think we can point at, like this energy transition we're in the middle of, and maybe the AI transition we're in the middle of, where in hindsight, people might look back and say also that this was this very prolific industrialization period. But overall, though, I do think people have a tendency to work hard when there's stress on them or environmental stress or economic stress or something like that. And we've done such a good job at removing those stress situations from the population, especially the developed population.

23:49I think that has a tendency to kind of get people to be a little more comfortable. And I do worry a little bit about that just as looking at the U.S. maybe in general versus maybe some other countries. And, you know, in my travels and, you know, working with, you know, groups in different countries, I can definitely see, you know, a difference in the level of intensity and work ethic and just the hunger to go and improve themselves and improve their families and improve their kind of, you know, next generation's lot in life. Well, we're almost at a time, and so I'll just one last question here.

24:21Kind of going back to where we began, how do you scale a business during great uncertainty when you have this vision for the world changing? We need to run the business stably, but also keeping our eye on that North Star of enabling the sustainability transition, taking advantage of it, and really building a profitable business to look at that incredible opportunity decades in the future. J.B. Straubel, founder of Redwood Materials, thank you so much for joining us today. Thanks for having me. And that's bold names for this week. Michael LaValle and Jessica Fenton are our sound designers. Jessica also wrote our theme music.

25:06We got help this week from Julie Chang, Catherine Millsop, Scott Salloway, and Philana Patterson. For even more, check out our columns on wsj.com. I'm Christopher Mims. And I'm Tim Higgins. Thanks for listening.