Receiving this award, I imagine it's up there. This is pretty cool. Thank you. I really appreciate the recognition. It's a great honor, and as you said, incredible company with some of your previous recipients here. I'm used to staying a little bit behind the spotlight sometimes. I prefer to be one step behind things and just get stuff done and make it work. It's unbelievable to see how this industry has grown and the scale we're at today, and also where we're going. We're not done yet. So anyway, thank you so much. This is humbling and I really appreciate it.
More than welcome. Did you think my thoughts on the election were too optimistic? We try to think this one over. I echo your thoughts about the future of this industry in the US in particular, and what this administration can benefit from and do here. We obviously can't change the current reality of what we have in the country. As you've highlighted, the Republican states stand to gain a huge amount from this. This is fundamentally an industrialization activity that we're in right now. We're scaling up, building mines, refineries, manufacturing sites. That's a different shift than where we were even four or five years ago, when it was trying to figure out the incentive structure to accelerate this and get it going. That's happened now. We just need to make sure it's going in the right direction.
Prior to Redwood and even at Redwood, we've gone through multiple cycles of Republican and Democrat administrations. This is a bipartisan issue if there ever was one: energy security, jobs, environment as well. In the beginning with the Gigafactory, that was linked to a supply chain necessity for the EV, for the Model 3 at the time. It was an audacious, amazing thing that we had this concept to go and build several hundred thousand EVs, which was 10 times more than anyone had ever done successfully or sold. The first big question was, will anyone even buy that many EVs? But we also knew that we literally had to bring the supply chain in. In our case, Panasonic was the first real battery maker to take that leap and commit to that factory and that supply chain, before knowing really what the customers were going to do. I specifically remember the launch event for the Model 3. It's a distant memory in the EV industry now, but it was a pivotal turning point. There were lines around the block, like an Apple iPhone launch. Over the course of maybe three or four days, there were several hundred thousand reservations. It blew all the expectations away, even from inside Tesla at the time. I remember coming back to the office and thinking, holy crap, we need to make this thing bigger. We had kind of gone as far as we could.
What you did at Tesla was really creating a whole ecosystem for the company. I think we're starting to see some of that around your plans at Redwood. I'm really eager to hear what you think the importance of creating that ecosystem is. We have a very fragmented, diverse supply chain, lots of people specializing in lots of different areas at the moment. But maybe there's an argument to push things forward at speed, which we need to do, that you do need to create that ecosystem yourselves under one roof.
In the beginning of the journey at Tesla, some of that was by necessity because there was not a supply chain. We couldn't go out and buy a battery module or a motor or a charger from any other companies. There wasn't that supply chain, so we were kind of forced to say, well, we can't buy these things. We have to engineer them ourselves. That's engineering optimization across all those physical components first. That's benefited Tesla massively. It's a tightly integrated architecture across that whole vehicle and all the vehicles they make today. But that's now extending and needs to extend to not just the functional components, but the batteries, the materials, the active materials, even the minerals. As we get to these scales, that dependency and the risk of having a supply chain that's global and subject to crazy geopolitics and maybe tariffs, which could be highly volatile, all that really hit home through COVID. Now again, that seems like ancient history, but it really highlighted the need for a more secure supply chain. The US has launched a lot of initiatives to begin to make a more tight ecosystem. But at Redwood, one of the opportunities I saw early on, back pre-2018, 2019, was to help architect that for the whole industry. I think this is a fundamental opportunity across the whole electrification industry: cars, trucks, even stationary storage. It's to architect that business ecosystem, figure out how to technically refine and reintroduce these materials. I saw this huge gap. There were no companies owning that. There was no incumbent technology or business architecture for it. But you could look at the physics and say, in 20, 30, 50 years, this has to happen. The materials are too valuable to just throw away.
People just didn't connect the dots. Is that a wider culture of not building stuff for so long, or is it something else?
I think it's twofold. One is it's far away. It seems infinitely far in the future. When you start to think about something that's relevant as the whole EV market matures and starts to reach some kind of steady state and turnover, people just say, okay, that's maybe 10 years away before this car comes back. It's too far to think about. That was one thing that put blinders on people. I think the other was just that it's unintuitive that these materials can get reused with such high efficiency. We're so used to a petroleum and fossil fuel ecosystem where things go from extraction to refining to consumption, and that's the end. But with batteries, you put these materials into an application and they just stay there. They don't get lost. They're 100% contained in the application, so they are all available to get remanufactured and reused. That is a fundamental difference with the electric infrastructure and ecosystem that we're building so quickly now versus the fossil fuel or especially petroleum ecosystem that helped power that construction and is still helping today.
With the concept of recycling being so relatively new, people are just coming to terms with the fact that we need to figure out a full life cycle for these materials. I'm curious what you think the opportunity is for the US. You see China doing bits and pieces around this, but obviously there's a lot more work to do. Going back to politics slightly, do you think that one of the positives coming out of the election is that the focus on doing stuff within our borders will mean that when we're not necessarily trying to take technology or partnerships with companies overseas to fill some of the IRA criteria, we can actually do it ourselves within our borders?
To your first question, I do think this is a huge opportunity for the US. If there's one thing we're good at, it's consuming. This is an incredibly powerful consuming market, an incredibly strong automotive market. We're buying a lot of these batteries. When you look at those graphs of who's buying all these batteries, where are they going? We're a big portion of that. The opportunity is that we can buy the same materials that we bought the first time again and again and again. That's unintuitive because we're used to thinking, okay, we imported this thing and that was a bad thing. But in this case, I think of it almost as an investment. We imported it, but now we have it. We should really work very hard to benefit from the strategic value that we bought and that we took control of: the minerals in the battery, the battery itself, the ecosystem around that. I think that can be an incredible opportunity for the US to shift its position on this. It will be very hard, I think not impossible, but hard for us to get some of that. It would be hard to close the loop entirely. But with recycling and reprocessing over time, that can be one of our most strategic ways to actually compete with external supply chains. If we're not having to constantly import the same material, that gives us a leg up to actually invest in the refining and in the midstream manufacturing here. To your second point, that is missing today. Even if we recycle material today, if we refine it again, we're missing a lot of the industries along the way to benefit from that. That is something we have to figure out to realize that benefit and to actually capture it.
We've seen Redwood move into that midstream and show what you're targeting there. I'm curious what you think is the optimal role of a company like Redwood, and beyond that, maybe speak a bit about the partnerships we've seen with automakers, a couple of big deals over the past 12 months. Is that the model, that you're plugging into automakers, or where do you stop along that midstream?
We're building into cathode active material. That's one of our big initiatives: to manufacture CAM. Our partnerships on the outgoing side are with cell makers and automakers who are stretching into battery manufacturing. Our biggest key customers are people like Panasonic, or Toyota and their battery manufacturing joint ventures. We're also working with a lot of the other cell manufacturers that are growing in the US. This is where I do think part of the implementation and interpretation of the IRA missed the mark a little bit. It de-incentivized midstream investment in the US. There was incredible success in incentivizing battery assembly, final assembly, and manufacturing in the US. But that was targeted at exactly what the incentive said. Big surprise, people have really kind of cherry-picked exactly where the incentive exists and invested there, capturing the incentive to do the battery making to get the $35 per kilowatt hour. But as the implementation adjusted and said, okay, well, you can also get that incentive if you use materials from friendly trade agreement countries, that made it cheaper and more geopolitically favorable to import those materials. So I think that is one shortcoming in my view of how the IRA actually got implemented. I think it's also a pathway for how the new Trump administration might reconcile the IRA to make some adjustments and to reduce the outflow of money, which is one of their stated goals: to slow down the flow of money into those incentives.
