The startup Redwood Materials Inc., founded by former Tesla Inc. (NASDAQ:TSLA) Chief Technical Officer J.B. Straubel, previously formed a partnership with Ford to develop a "closed-loop" or circular supply chain for electric-vehicle batteries, from raw materials to recycling.
On Thursday, Ford Motor (NYSE:F) and Geely Automobile's (SEHK:175) Volvo cars said it would now join Redwood in developing processes, starting in California, to collect end-of-life batteries from electric and hybrid vehicles and recover the materials for use in new batteries.
Redwood said it would work directly with dealers and dismantlers and recover and recycle materials at Redwood Materials facilities in northern Nevada.
The transition to electric vehicles in the U.S. has been led by California with plans to end the sales of new cars and trucks powered by gasoline or diesel by 2035. The startup currently works with state agencies, including the California Environmental Protection Agency, to look at how efforts can be further streamlined.
Ford invested $50 million in Redwood Materials Inc. when forming its partnership back in September.
“This new program with Redwood Materials will help Ford lead America’s transition to sustainable and carbon-neutral EV manufacturing and ultimately help make electric vehicles more sustainable and affordable for our customers.” Chief Executive Officer Jim Farley, Ford
AGGRESSIVE SPENDING
Currently, Ford's strategy is to heavily invest across its EV product categories to try to gain an edge over its competitors. The company expects its first-generation EVs to have kinks and cost inefficiencies that Ford will mitigate in second-generation models.
Despite the aggressive spending, Ford expects to continue to be a profitable company that rakes in a ton of extra free cash flow that it can use to pay down debt, grow dividends and accelerate EV spending.
Ford stock has a Moderate Buy consensus rating based on 8 Buys, 7 Holds, and 2 Sells. The average price prediction of $23.63 implies an upside potential of 35.3% to current levels.
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