Tesla co-founder considering a battery recycling plant in Germany

J. B. Straubel, one of Tesla's top executives who has headed the technology department for years, is considering setting up a manufacturing facility in Europe with his company Redwood Materials, which specializes in battery recycling. According to insiders, Germany is a priority location for production. 

The investment is expected to be about one billion dollars. Today, electric cars are growing in popularity, so the ability to recycle batteries guarantees long-term success for them, which is important for Germany. Redwood, for its part, is a pioneer in this area and recently signed a partnership agreement with Volkswagen in the United States.

According to those closest to the company, the choice may still fall on Scandinavia. The battery recycling process requires a lot of electricity, and in Germany the cost is already high and has the potential to grow for the rest of the year. Thus, locating production in Germany could prove to be a bad investment.

Stefan Di Bitonto, an automotive industry expert at Germany Trade and Invest (GTAI), which serves many companies considering investing in Germany, said that electricity costs are a major pushback for potential investors.

A location expert reports mounting tensions: rising electricity prices in Germany have led to the cancellation of an investment project by one of the companies overseen by GTAI.

Earlier this year, Straubel announced it would build at least two plants to recycle and produce battery materials in Europe. Company representatives said these plants should be built as close as possible to existing battery and automotive manufacturing facilities. Scandinavia, the U.K. and Eastern Europe, as well as Germany, are now being considered as potential locations.

A decision is scheduled to be made this fall. Redwood insiders report that the number of options has dropped significantly in the meantime.

Favorites include places like central and northern Sweden and northeastern Germany. Schleswig-Holstein and Mecklenburg-Vorpommern are attractive for their wind power capacity. Also nearby are the Volkswagen and Tesla plants in Wolfsburg and Grünheide, respectively. In addition, there are new CATL battery factories nearby.

Despite this, Germany has a competitive disadvantage, namely, high electricity prices. Recycling batteries requires a lot of energy, so production loses a lot of potential profit.

According to several insiders, the company is negotiating in detail the construction site and preparing a final cost estimate. After that, the approval process will begin and a final decision on the location will be made.