Tesla co-founder J.B. Straubel stood on a bluff overlooking acres of neatly stacked packs of used-up lithium-ion batteries. Straubel had just struck black gold.

Earlier that day, his battery-recycling company, Redwood Materials, flipped the switch on its first commercial-scale line producing a fine black powder essential to electric vehicle batteries.

Known as cathode active material, it’s responsible for a third of the cost of a battery. Redwood plans to manufacture enough of the stuff to build more than 1.3 million EVs a year by 2028, in addition to other battery components that have never been made in the U.S. before.

It’s a turning point for a U.S. battery supply chain that’s currently beholden to China. The world’s second-biggest economy controls 70% of the planet’s lithium refining capacity and as much as 95% of production for other crucial materials needed to make EVs.

Redwood is attempting to break that stranglehold by creating a domestic loop using recycled critical metals.

The company’s rapid progress interested a group of independent Stanford researchers who were given access to Redwood’s data over the last two years to conduct an environmental assessment of its battery recycling.

The Stanford report found that Redwood’s recycling and refining operations cut carbon dioxide emissions by 70% compared with traditional recycling methods and 40% compared with other recycling processes. The savings were even greater when Redwood was dealing with manufacturing scrap, which currently makes up roughly half of the materials available for recycling.

At Redwood, nothing goes to landfill, and no water leaves the facility except the sanitary waste from sinks and toilets. There are no gas lines; everything is electric. It’s also built for scale, allowing the company to quickly break down a truckload of assorted batteries without manual sorting or tedious disassembly.

Straubel left Tesla in 2019 after he grew concerned about a widening gap between EV demand and the materials needed to make batteries.

Redwood quickly became the biggest lithium-ion battery recycler in North America before branching into the more lucrative market for complex materials that make up the two sides of the battery - anode and cathode - in the last few years. The company now sells about two dozen products, including lower-value materials like unprocessed aluminum scrap, which is already widely recycled, and calcium sulfate sold off as gypsum to make drywall.

The Redwood process starts in an indoor staging area where everything from discarded earbuds and laptop batteries to EV modules from recalled Chevy Bolts are dumped onto a conveyor belt. The jumbled mess is carried roughly 30 feet up to a hole in the wall where it exits the building into a giant churning metal tunnel, dubbed “RC1,” suspended high above the ground.

RC1 is essentially an enormous slow cooker, baking the junk at several hundred degrees for about an hour, and is perhaps Redwood’s biggest innovation thus far.

Traditional recycling through burning uses heat well over 1,800 degrees Fahrenheit to separate out precious metals, but Redwood’s goal at this stage is to preserve and prepare the materials for the next steps in the most efficient way.

Importantly, RC1 doesn’t use any oxygen - there’s no combustion and, thus, no emissions. It simply reduces the glues, plastics and unwanted fluids into charcoal. The high-grade black carbon left over can be sold for use in black paints and industrial lubrication.

The RC1 also uses surprisingly little electricity, which is key to lowering Redwood’s climate impact. Once the kiln heats up, the energy released from the batteries is self-sustaining. Think of it as a controlled, slow-motion version of a battery fire, running nonstop day and night, week after week. It safely releases the charge in any batteries that could pose a danger to workers, while breaking down the stuff that binds key minerals together.

After leaving RC1, the charbroiled batteries pass through machines that sift the material through screens. Powerful magnets are used to isolate certain materials. The remaining mineral-rich dust, known as black mass, is mixed into a slurry of solvents and fed into another building that resembles a large beer brewery, with towering stainless steel tanks that use chemicals, pressure, filters and evaporation to separate products into their core elements.

Copper foil production has never existed in the U.S. For the last year, Redwood has been cranking out sample rolls for potential customers to test. In the coming weeks, the company’s foils will officially enter the supply chain to be used in American EVs, Straubel said. “It’s literally the first time anyone has made that material in the U.S. - ever - for a battery,” he said.

Having Straubel at the helm of Redwood is a selling point for investors. He was the mastermind behind Tesla’s battery strategy and his connections from Silicon Valley to Wall Street helped the company raise $2 billion in private funding and secure a $2 billion loan commitment from the Department of Energy that it can tap once certain milestones are met.