U.S.-based battery materials producer Redwood Materials received a conditional commitment for a $2 billion loan from the U.S. Department of Energy (DOE) to commence the production of anode foil, one of the most crucial components in a battery.

DOE released the commitment to Redwood as part of the Advanced Technology Vehicles Manufacturing Loan Program.

Redwood will use the fund to produce 100 GWh of ultra-thin battery-grade copper foil and cathode-active materials annually, from both new and recycled feedstocks at gigafactory scale in the U.S. This will provide enough battery materials to produce over a million electric vehicles (EV) a year domestically.

The DOE financing to Redwood will help U.S. bolster domestic manufacturing without which battery cell manufacturers in America are estimated to offshore over $150 billion in economic value for anode and cathode components by the end of the decade.

Of the companies Redwood has partnered with, Panasonic will be the first to source the copper foil for cell production in the Nevada gigafactory and the company’s cathode material for battery cell production in its new Kansas plant, that is scheduled to go online in 2025.

Cathode and anode are the two most important components which amount to nearly 80% of the materials cost of a lithium-ion battery. However, Asia dominates in the production of these components.

The production of anode foil will pave the way for battery and automotive manufacturers to meet the new stringent critical mineral and battery component requirements for consumers to qualify for EV tax credits as established by the Inflation Reduction Act passed in August 2022.

Last May, DOE announced $3.16 billion in funding from President Biden’s ‘Bipartisan Infrastructure Law’ to expand domestic battery manufacturing and support domestic supply chains.

The DOE’s National Renewable Energy Laboratory outlined measures to limit and reuse the materials used in diverse designs of lithium-ion batteries, to establish a circular economy-based sustainable strategy. A circular economy replaces the end-of-life concept with restoration, shifts towards the use of renewable energy, and aims to eliminate waste through the superior design of materials, products, systems, and business models.