Redwood Materials pushes forward despite EV slowdown: Deepwater

Gene Munster and Brian Baker from Deepwater Asset Management visited Redwood Materials recently. The analysts believe the battery recycling company will be prosperous despite the soft demand for electric vehicles (EVs) this year. 

Despite the current EV sales slowdown, Redwood Material maintains a steadfast course to a successful future. Munster and Baker from Deepwater believe the Redwood Material is prepared to face the influx of business once the demand for EVs picks up. 

“The concept of a winter best describes the EV and battery macro. I believe we’re about halfway through this season, which is defined by soft consumer demand for EVs, and to a lesser extent, lower pricing of metals that go into EV batteries. These two factors have led to a battery headwind. However, the good news is that these factors have stabilized, and I believe will improve starting in 2025,” stated Munster and Baker’s latest note on Redwood Materials.

Redwood’s partners, like Toyota and Panasonic, maintain good relations with the battery recycling company. As a refresher, Redwood Materials is led by Tesla executive JB Straubel. It recycles nickel, copper, cobalt, and lithium from old batteries. The company also refines recycled metals into critical battery components, mainly cathode active material. 

The Straubel-led battery recycling company plans to localize battery production in North America, specifically in the United States. In the current political landscape, more countries favor local EV production and encourage automakers to establish supply chains locally. 

Redwood Materials is positioned well to dominate its current niche in the United States. 

“Redwood has partnerships with nearly every significant electric vehicle automaker or US battery cell manufacturer, at this stage, for recycling. Redwood will maintain a pole position in what is a long-term move to electrification, as well as benefiting from the supply chain on-shoring theme,” noted Munster. 

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