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Ford (F) Teams Up With Redwood for EV Battery Recycling

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Ford (F - Free Report) recently announced that it is partnering with Redwood Materials, a leading battery materials company, to make electric vehicles (EVs) more sustainable and economical for customers by building a domestic battery supply chain for EVs, creating recycling options for the end-of-life vehicles and enhancing battery production.

Based in northern Nevada, Redwood recycles scrap from battery cell production and consumer electronics like cell phone batteries and laptop computers. The company then processes these discarded goods, extracting materials like cobalt, nickel and lithium that are typically mined, and supplied back to its customers.

The collaboration between Ford and Redwood aims to amalgamate battery recycling into the auto biggie’s domestic battery strategy. Redwood’s recycling technology can recover most of the key elements,critical to manufacturing EV battery packs, which can be reused by Ford in a closed-loop system for future battery production. By using locally-produced, recycled battery materials, Ford can bring down costs, and reduce its reliance on imports and mining of raw materials. This approach will help ensure that the valuable materials in the end-of-life batteries re-enter the supply chain and do not get wasted. It will also reduce Ford’s dependence on the existing supply-chain network.

Additionally, Redwood is creating a circular supply chain for batteries, and aiding its partners by providing processes and technologies to reuse and remanufacture lithium-ion batteries. Creating a U.S. circular supply chain is a crucial step toward making battery-powered EVs viable and cheaper for more customers.

Ford is highly optimistic about this partnership. Accelerating the production of batteries and their materials through domestic recycling can help the automaker fortify its U.S. manufacturing foothold of lithium-ion batteries, decrease the cost of EVs and in turn, speed up the domestic adoption of EVs. The collaboration with Redwood will help ensure the right infrastructure is in place to cost-effectively recycle the end-of-life Ford batteries to create a solid pool of domestic raw materials and thus, make EVs economical.

Ford has invested $50 million into Redwood to support the latter’s expansion in the United States, and further scale up the relationship between the two companies.

Amid the heightening climate change concerns, investors are intrigued by automakers that provide green transportation solutions. Automakers like Tesla (TSLA - Free Report) , General Motors (GM - Free Report) and Volkswagen (VWAGY - Free Report) are leaving no stone unturned to step up their EV game. Thus, amid the intensified competition, the development of batteries used to power EVs has become crucial in order to decarbonize the global economy. This has also forced automakers to increasingly focus on the enhancing the life cycle of EV batteries and make them more cost-effective.

The latest agreement is an evidence that automakers are taking significant steps to address the supply and cost of raw materials needed to manufacture batteries for electric vehicles, in order to make EVs more pocket friendly.

The deal comes when Ford is adding more electric vehicles to its product menu, including the upcoming F-150 Lightning pick-up truck, the first-ever all-electric F-Series truck designed for commercial customers. The latest agreement also builds on Ford’s previously-announced plans to boost battery production through multiple BlueOvalSK battery plants in North America commencing mid-decade.

Dearborn-based Ford is committed toward its goal of providing completely carbon-free transportation in the upcoming years and is boosting the company’s electrification efforts to attain this target. The company has always been at the forefront of the automotive revolution and is focused on its vision of an all-electric future, including providing fifth-generation lithium ion batteries as well as preparing for the transition to solid-state batteries, which warrant longer ranges, reduced costs and safer EVs for customers. The automaker has committed to invest more than $30 billion by 2025 for the electrification of its commercial and retail fleet by capitalizing on its strength, starting with the EV versions of the company’s most popular models.

Ford currently carries a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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