Redwood Materials has undergone a massive strategic expansion in the last nine months. Founded by former Tesla CTO JB Strauble, the company has built its name and raised more than $2 billion on a pitch to recycle batteries by breaking them down into raw minerals. But last summer, it pivoted to energy storage, launching a new business line called Redwood Energy — a pitch geared squarely at the artificial intelligence boom.
In January 2025, Redwood Materials’ homepage touted the company’s efforts to build “a circular supply chain to power a sustainable world.” Today, the page is dedicated to Redwood’s work to deploy “energy storage systems that power data centers and the nation’s grid, while producing critical minerals.”
The expansion from simply recycling batteries to repurposing them has already begun to pay off, bringing financial support and interest from many of the biggest players in the AI race. In October, Nvidia became a Redwood investor, as part of the company’s Series E. And today, Redwood announced Google has also joined the investment round, which has now closed at $425 million.
The round is less than half of the $1 billion Series D that Redwood raised in August 2023. But its strategic scope is distinctly different. While the Series D was designed to fund the capital-intensive build-out of industrial refineries, the Series E is explicitly for accelerating the deployment of Redwood’s new energy storage platform.
Repurposing batteries is significantly cheaper than recycling them and then manufacturing new components from scrap. Redwood is selling its systems as fixed-capacity storage, swapping out degraded packs as needed to ensure uptime, and using its proprietary software to harmonize the disparate chemistries and battery health across unique modules.
This software is key to Redwood’s new business model, CTO Colin Campbell explained on an episode of Catalyst last year. It allows the company to integrate packs from different vehicles, regardless of chemistry or voltage, into a single asset.
Listen to Colin Campbell’s whole interview on Catalyst:
When first announcing its new energy storage business arm last summer, Redwood said it had more than a gigawatt of committed projects in the pipeline, and expected another five GW in the next 12 months. It also announced a one-megawatt proof-of-concept project in Nevada, built to power a modular data center built by Crusoe.
At the time — and still today — that project remains Redwood’s first completed deployment.
Surviving the recycling gap
The battery recycling industry has so far struggled to truly scale, in part because there just aren’t enough used batteries to go around. Redwood, for its part, is the largest lithium-ion battery recycler in North America, processing more than 60,000 tons of battery materials annually at its Nevada recycling plant. It recently began mineral recovery at a $3.5 billion campus in South Carolina, though that project faced significant delays.
Redwood has run into the same input challenges as other recycling companies, which is part of what prompted its pivot. The vast majority of Redwood’s input is still manufacturing scrap, Campbell said. But the fastest-growing input is actually EV batteries, and the company is betting on a massive influx of end-of-life EV packs in the near future. Redwood’s pivot to grid-scale storage is essentially buying the company some time while the first generation of mass-market EVs actually reach end-of-life.
That said, it’s not yet clear whether the company will eventually re-focus on its original promise of onshoring a circular cathode and anode manufacturing supply chain — or if the higher-margin world of energy services will become the permanent core of the business.
This new model may be more capital-efficient and revenue-resilient than mineral refining. Not only is there massive demand for power that can be built quickly, but the approach avoids the high costs of chemical recycling, sidesteps the relatively low-margin mineral market, and offers Redwood a way to generate immediate revenue.
But the shift from vendor to vertical developer remains a challenging one. In November, right after announcing the first $325 million of its Series E, Redwood laid off dozens of workers across the company, totaling around 6% of its workforce, Bloomberg reported. The cuts targeted cathode engineers in particular, signaling a retreat from the manufacturing arm of the business.
Another challenge is the fact that Redwood’s battery deployments require an immense amount of space, meaning they can’t easily be tacked on to existing data center sites looking to expand capacity. That may also make deployment challenging from a community opposition perspective, which continues to pose a problem for developers even as they build behind the meter to get around grid interconnection delays.
Campbell, though, is adamant that Redwood Energy is more of a “detour” than a pivot away from recycling.“We don’t have to choose,” he told Catalyst host Shayle Kann in July 2025. “We can put these batteries out to a grid storage pasture for a little while to really extract all of the energy storage and power delivery value that they have, and then go on to recover the critical minerals from them and regenerate fresh cathode materials.”
