Redwood Materials raises $425M to scale energy storage

Redwood Materials, the battery recycling and cathode production startup founded by former Tesla CTO JB Straubel, has expanded its Series E—a late-stage funding round—to $425 million. Google joined the round as a new investor, alongside existing backers Capricorn and Goldman Sachs. The fresh capital pushes the company’s post-money valuation north of $6 billion, according to a source familiar with the round, and brings Redwood’s total private capital raised to $2.3 billion. The expansion follows an initial $350 million Series E tranche raised last October, which was led by venture firm Eclipse and included strategic investment from Nvidia’s venture capital arm, NVentures.

Redwood Materials was founded in 2017 to build a circular supply chain for batteries, initially focusing on recycling scrap from consumer electronics and manufacturing to extract metals like nickel and lithium for customers such as Panasonic. However, the company has increasingly expanded into energy infrastructure. Its energy-storage business unit, Redwood Energy, repurposes electric vehicle batteries that are not yet ready for recycling, turning them into micro-grids to supply power to industrial sites and artificial intelligence data centers. This shift addresses the massive power requirements of modern computing infrastructure. “As electricity demand surges — driven by AI, data centers, manufacturing and electrification — energy storage is no longer optional; it is essential infrastructure,” the company stated.

Redwood’s expansion relies on its established supply chain. The company recovers more than 70% of all used or discarded battery packs in North America. Many of these recovered packs are redirected to its energy storage business rather than undergoing immediate cathode production—the manufacturing process for battery components. Redwood reported having more than 1 gigawatt-hour—a unit of energy storage capacity—in its inventory last year, with expectations to receive another 4 gigawatt-hours. Looking ahead, the company expects to deploy 20 gigawatt-hours of grid-scale storage by 2028.

Why it matters

Redwood Materials is pivoting from pure recycling to critical energy infrastructure, positioning itself as a key supplier for the power-hungry AI data center market.