Redwood Materials plans to develop a $3.5 billion factory near Charleston, South Carolina, to make parts for batteries used in electric vehicles, the biggest economic development project in the state's history and a sign of the surging demand that's fueling growth in the so-called Battery Belt.

The planned campus on more than 600 acres will serve as Redwood’s East Coast manufacturing center, producing cathode and anode for lithium-ion batteries. On the other side of the country, Redwood is also spending $3.5 billion at its battery parts plant near Reno, Nevada. Redwood, based in Carson City, Nevada, is led by JB Straubel, a former executive at Tesla, the world’s largest maker of electric vehicles.

The campus at the Camp Hall industrial park in Ridgeville is expected to break ground in the first quarter in what the state Department of Commerce says is South Carolina's priciest project.

The Southeast has become a hotbed for industrial projects tied to electric vehicles and lithium-ion batteries. Volvo is building a factory in the same industrial park chosen by Redwood to make electric SUVs. Kontrolmatik this week announced a $279 million factory to make batteries for renewable power storage in nearby Walterboro, South Carolina.

A new manufacturing corridor from Michigan to Georgia is housing dozens of battery production projects that are planned to start operations between now and 2030, Redwood said in the statement.

Redwood’s production method is to recycle old batteries and other electronics to recover nickel, copper, cobalt and lithium, which it then converts to cathode and anode materials. Redwood will sell the cathode and anode to companies that manufacture lithium-ion batteries.

Cathode and anode products are currently not manufactured in North America, and Redwood’s new facility is expected to help speed up the supply chain while lowering costs for battery makers, Redwood said in the statement.

Redwood’s existing partners including Toyota, Volvo, Panasonic and Envision AESC have a strong foothold in the Battery Belt region, in addition to many other battery manufacturers, according to the statement.

South Carolina will issue $226 million in general obligation bonds to help pay for site acquisition, infrastructure and other expenses for Redwood's new campus.

The state also awarded Redwood with undisclosed financial incentives based on job creation. The project is expected to create 1,500 jobs.

Initial production from the new campus in Berkeley County is expected to start by the end of 2023. More details about the campus were not disclosed.

"We're ready to support this region and U.S. electrification by driving down battery costs, emissions, and reducing reliance on foreign supply chains,” said Straubel in the statement.