The partnership between the two companies is founded on a single premise: that by recycling disused battery packs, Ford can make new battery packs and those new battery packs that can power Ford's incoming line-up of electric vehicles.
Not only is this model self-sustaining, but it also embodies the vision of Redwood CEO and Tesla
Ford, who makes batteries in partnership with SK Innovations, will initially send leftover materials from that process to Redwood and its current facilities in Carson City, NV. In exchange, Ford will get a steady stream of lithium, copper, and nickel to make its battery packs.
"It [the partnership] will help us reduce the reliance on importing a lot of the materials that we use today when we build the batteries, and then it'll reduce the mining of raw materials, which is going to be incredibly important in the future as we start to scale," Lisa Drake, Ford's chief operating officer, told CNBC. "Creating this domestic supply chain is really a major step towards making electric vehicles more affordable and more accessible to everyone."
The system Ford envisions represents a "closed-loop" in terms of battery pack production. Ford's move represents a renewed focus on the part of automakers to shore up their domestic supply lines ahead of an anticipated surge in EV sales, which are expected to breach 1 million per annum according to LMC automotive.
In this future, recycling battery packs just makes sense, as battery packs represent most of the costs sunk into the production of each electric vehicle. In light of that, prices fall, the haze of human suffering around the harvest of raw materials clears up, and things get better when you have a supplier like Redwood, who has the needed materials and happens to be only a few states away.
Redwood, and its CEO and founder, JB Straubel are willing to spend at least a billion dollars to ensure such a future comes to pass. Once his billion-dollar "giga factory" is on the ground, Straubel predicts that the plant will produce enough materials to make 1 million battery packs per year by 2025, with that number expected to grow by five times less than a decade later.
"We're building and deploying around a little more than 2,000 batteries onto the roads in America, every single day," said Straubel. "We need to at least be planning to figure out how we can very efficiently and sustainably recycle and disassemble a similar number of batteries."
For Ford, creating such a closed-loop system would require a cradle to grave tracking of EV batteries, a system for which Ford has no formal plans in place to establish.
Although such a system is possible, Sam Jaffe, managing director at Carin Energy Research Advisors, told CNBC. "It's possible for the automaker to shepherd that battery through its lifetime, and get it to the recycling center," he said while citing Europe, where it is legally mandated that automakers track their batteries to ensure that they are being recycled.
Despite these implicit challenges, the opportunity of creating a means of self-sustaining battery production is not lost on Ford.
"If we can recapture that value and not have to mine again and have some domestic supply security, that's incredibly valuable for us," added Lisa Drake, the aforementioned chief operating officer at Ford.