Cofounder, Tesla
Tesla co-founder JB Straubel: We're using recycled EV batteries to power AI training data center
CNBC's Phil LeBeau talks with JB Straubel, Redwood Materials CEO and Tesla co-founder, to discuss the Redwood's new ...
About Jb Straubel
JB Straubel, co-founder of Tesla and founder and CEO of Redwood Materials, has been focused on building a circular supply chain for lithium-ion batteries. In 2025, he announced a new initiative called Redwood Energy, which repurposes used EV battery packs into a microgrid to power an AI training data center, describing it as an array of hundreds of old automotive battery packs that can provide 3 to 5 years of additional usable life. Straubel stated that Redwood Materials currently recycles approximately 70 to 75% of all lithium-ion batteries in the U.S. and is the second largest supplier of nickel and lithium from recycled materials in the country, doing so profitably without federal subsidies. He has also discussed the importance of scaling manufacturing, noting that the company processes around 20 to 25 gigawatt-hours of material per year and that the volume of incoming material is doubling annually. Straubel has commented on policy and industry trends, expressing cautious optimism about the future of the U.S. battery industry. He said that the implementation of the Inflation Reduction Act "missed the mark a little bit" by de-incentivizing midstream investment, but suggested there is a pathway for the new administration to reconcile the law to make it more effective. He described electrification as a "multi-decade transition" and stated that EVs have "clearly crossed a tipping point," though he acknowledged turbulence around incentives. Straubel also said he remains "super confident" in Tesla's talent pool and described the future as "pretty exciting for energy, for transportation, for autonomy."
Transcript (28 segments)
I
Interviewer0:01
Welcome back. Tesla co-founder and board member JB Straubel is launching an initiative called Redwood Energy through his Redwood Materials company. The firm plans to recycle EV car batteries and convert them into low cost energy storage for data centers. JB Straubel joins us now, along, of course, with Phil LeBeau from Sparks, Nevada. Phil, take it away.
P
Phil LeBeau0:29
Thank you, David. JB, we're looking down on your microgrid down here, which you guys have put together for Crusoe, the AI infrastructure firm. Explain to me in layman's terms so people understand these are old EV battery packs down here that are harnessing and then providing the energy for the data center. Correct.
J
Jb Straubel0:45
They are. This behind us here is an array of hundreds of old automotive battery packs that we've architected and connected all together to create its own microgrid and power this AI training data center.
P
Phil LeBeau0:58
We have a lot of people who have EVs, and they're coming maybe after 8 or 9 years and they're saying, look, it only has 50% capacity to charge. This thing is old. It's going to die on me. That doesn't mean it's a dead battery, correct?
J
Jb Straubel1:10
No, there's still a lot of usable energy storage left. Even at 50% capacity, we can make very productive use of that in this type of application.
P
Phil LeBeau1:19
So as you look at this, are we at a point right now, even with the slowdown in EV sales, where we're starting to see the ramp up in the demand or the supply of recycled EV batteries?
J
Jb Straubel1:31
Well, for us, it's really oriented around what happened a couple of years ago, and there are millions of EVs already on the roads today. So that's what's feeding this kind of growth. And we're seeing doubling every year in the amount of material coming into us.
P
Phil LeBeau1:45
And now, there's going to be people who will look at this and they'll say, well, that's fine, but you can just do a microgrid or you can do some kind of a power setup for a data center, and you can be much larger and hook right into the grid. Why does this make more sense?
J
Jb Straubel2:00
Well, a couple of the key reasons are speed. We were able to do this in about four months of construction. This is operating outside of the grid. So we didn't put any extra stress on the grid. And that's key for the AI growth today, to be able to get access to more power quickly. This is a way to do that.
P
Phil LeBeau2:17
I want to ask you about your other job as a member of the Tesla board. You see what's happening with EVs. If the Inflation Reduction Act and those incentives go away, there's a lot of concern about how much EV demand and EV sales will slow down. What do you see as you look at the industry from the Tesla perspective? Not just Tesla, but the EV companies that are out there right now?
J
Jb Straubel2:40
Well, I'd say really from a personal perspective, I think EVs have clearly crossed a tipping point. There's a lot of turbulence and confusion about which incentives will last and how they will unfold. But it's important to realize that EVs are still setting records every quarter in terms of their growth. We're really talking about slowdowns in the growth rate, but there's still a phenomenal amount being deployed. People love the cars, and once they convert to driving an EV, very few actually go back to driving an internal combustion car.
P
Phil LeBeau3:09
So the 9% market share we see right now, you think it holds around that?
J
Jb Straubel3:13
I think it increases from there. It may increase a little more slowly than some people had hoped, but I think it's going to continue to increase from there.
P
Phil LeBeau3:22
What about the supply chain? There's still so much of the processing that happens for EV batteries in China. And the Trump administration has made it very clear, look, we want everything out of China. Otherwise there's going to be some tariff impacts there. Is that going to keep the supply chain from being able to move quick enough over here, or increase the cost on the batteries that are being produced?
J
Jb Straubel3:42
Well, I think there's a lot of initiatives, even some of what we're doing here at Redwood, to localize that supply chain, to build all the different core components, whether it's cathode material or get access to the critical minerals. And I think having a framework of policies that promotes that and values that will actually put us in a stronger position in the future.
P
Phil LeBeau4:02
But in 3 or 4 years, will we see more of that supply chain here in North America? Because we heard this a couple of years ago, and it seems like it's been slow to move over here. It's still anchored in China.
J
Jb Straubel4:13
Well, there's been a massive increase in the amount of batteries that actually get assembled here. That's quite a success story in the US. And the supply chain has to follow, but it is beginning to follow. And I think in three years we will absolutely see more of it. It'll grow.
P
Phil LeBeau4:27
You're on the Tesla board of directors. Next week, deliveries will be reported. Not going to ask you about how they're going to look for Tesla, but there is a concern that the demand is slowing down, not just for Teslas but for EVs overall. What do you see in terms of the customers and their interest in going electric right now?
J
Jb Straubel4:47
Well, I still see people excited about electric vehicles. We're kind of crossing as an industry into a new type of customer, into more of a mass market that takes a little bit more training and education. But again, as people make that conversion, they're generally loving the vehicles. I don't meet too many people who experience EVs and then go back to driving internal combustion. And to me, that's really telling. It's kind of a one-way transition.
P
Phil LeBeau5:12
At the same time, Elon Musk has said, look, the future of Tesla is autonomous and Optimus. We don't hear a lot of talk about the EV portion of Tesla. We hear about autonomous and Optimus. Why should investors buy into that right now? Because there's more than a few who sit there and say, well, wait a second, what about the core business? Does that mean it's slowing down to a point where we should discount it?
J
Jb Straubel5:38
Well, I can't speak to that directly. But personally, I think EVs are still a critical part of the future of growth in the US and for companies like Tesla and across the whole automotive industry.
P
Phil LeBeau5:50
One last question regarding the microgrids and what you're doing out here with your battery packs. You can monitor all of these. How long will an old EV battery pack that's in one of these centers down here last? You've got about 80 down here that are helping power the data center. How long will they last before you have to say, okay, change it up, put a different old EV battery pack in here?
J
Jb Straubel6:11
Yeah, almost 800 out here. And we expect these will last anywhere from 3 to 5 years of additional usable life. So maybe more than you would expect. But this is a much easier application than they see when they're in a vehicle, so we can extend that quite significantly.
P
Phil LeBeau6:26
One last thing. One of our editors back in the newsroom just said to me, you've got one of the primary people at Tesla who has just announced that he's not going to be there anymore. And there's some questions about the talent pool that is there. You've seen these over the years as people have come and gone. How comfortable do you feel about the talent pool that is there right now?
J
Jb Straubel6:49
I'm still super confident. I think it's an incredibly exciting time. And there's an enormous amount of interest from very, very smart people who are clamoring to be a part of that.
P
Phil LeBeau6:59
And also clamoring to be a part of what you're doing here.
J
Jb Straubel7:03
I think the future is pretty exciting for energy, for transportation, for autonomy. I personally am an optimist. I'm very bullish that we can usher in a whole wave of growth and prosperity that we haven't seen before.
P
Phil LeBeau7:18
We will send it back to you. JB Straubel, thank you for joining us out here at Redwood Materials.