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Cleaner Battery And Electric Vehicle Tech Startups Are Getting Bigger Checks

Illustration of electric car plugged into an outlet.

Electric vehicles may be cleaner and greener than their fossil fuel-guzzling counterparts. But for environmentalists and automakers alike, EV and battery makers still fall short on the sustainability front. In particular, reliance on rare earth elements and rare metal extraction remains a pressing concern.

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Lately, it looks like startups addressing these issues are generating stepped-up interest from investors. 

Last week, two companies aimed at building more sustainable battery, electronics and EV infrastructure raised sizable rounds.

By far the largest was Nevada-based Redwood Materials. The startup, which is building a closed-loop supply chain for electric vehicles and energy products, closed on $700 million in fresh funding from a consortium of new growth investors and existing venture backers.

Led by JB Straubel, a co-founder and former CTO at Tesla who led development of the company’s Gigafactory concept, the company has inked partnerships with Panasonic, Amazon and others to recycle lithium-ion batteries and e-waste from parts of their businesses.   

The smaller funding round, meanwhile, went to Minneapolis-based Niron Magnetics, which makes permanent-magnet motors using a process that does not require rare earth materials. Such magnets are a key component in a range of consumer electronics, autos and industrial products, which helped Niron pull in $21 million in its late-July venture round last week. 

Broadly, investment to startups working on more sustainable approaches to battery and electric vehicle development has been on a tear this year. At least seven companies in the space have collectively pulled in more than $3.5 billion in funding in 2021, according to an analysis of Crunchbase data. We list them below:


A single company, Swedish battery maker Northvolt, took the lion’s share of funding. The company closed on $2.8 billion in a June venture funding round, and plans to expand capacity at the factory it is building.

The latest round brings total funding to $6 billion for Northvolt, with a stated mission to deliver batteries with an 80 percent lower carbon footprint compared to those made using coal energy. The company’s goal is to source half of its raw materials from recycled batteries by 2030.

Greener and cheaper

For startups and their backers, the benefits of greener or recycled materials aren’t just about being more environmentally conscious. They’re also intended to save money in the long run and reduce overreliance on scarce and hard-to-source materials.

Niron’s website, for instance, notes that: “For high performance applications, magnets made of rare-earth materials are the most widely used today. However, the mining, extraction, and manufacturing processes are labor intensive, expensive, and environmentally damaging. Due to persistent supply chain and geopolitical issues, the prices of these materials have been historically unstable and have surged over the last year.”

Automakers have been active backers of startups working on sustainable battery and EV technologies. Volkswagen, for instance, looks to be the largest stakeholder in Northvolt. Volvo Cars Tech Fund co-led Niron’s latest round. And BMW i Ventures, which launched a $300 million second fund a few weeks ago, says it will be focusing heavily on startups offering greener approaches to automaking.

“Our first fund was very tech driven,” said Marcus Behrendt, BMW i Ventures’ partner and CEO. “Our new fund is looking to focus somewhat more on sustainability.”

Behrendt points to a $50 million Series B round his firm participated in earlier this year for Boston Metal, a maker of “green steel” using a process that it says produces no CO2 or greenhouse gases. That’s significant as it estimates that 7 percent of all greenhouse gasses are caused by steel making alone.

Locally sourced, delivered by SPAC

Notably, while plenty of startups are making a point of reducing reliance on rare earth materials, the biggest name in tech SPACs has put his name behind a company looking to mine the stuff.

MP Materials, a company that operates what it says is the only integrated rare earth mining and processing site in North America, went public in November after completing a merger with blank-check acquirer Fortress Value Acquisition Corp. The deal also included an investment from tech billionaire and oft-described “SPAC king” Chamath Palihapitiya.

The company touts its “best-in-class sustainability” along with its potential as an alternative source for the strategic materials supply chains, currently dominated by China. 

With a recent valuation of around $6 billion, MP’s pitch to investors demonstrates that even mining companies can get into sustainability themed marketing. 

Fortunately, venture funding data indicates that there are plenty of non-mining companies teeing up for bigger roles as well.

Illustration: Dom Guzman

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