Energy · Deep dive

Redwood Materials

JB Straubel's Carson City battery company: North America's dominant lithium-ion recycler (~70% share), builder of a domestic cathode and copper-foil supply chain, and — since June 2025 — an energy-storage developer that turns used EV packs into microgrids for AI data centers, closing a $425M Series E at a $6B+ valuation with Nvidia and Google in January 2026 and then cutting 10% of staff to chase storage.

emerging

The question that decides it: Redwood Energy's storage economics rest on buying used EV packs at near-scrap prices — packs Redwood already receives as recycling feedstock — and redeploying them at an estimated 30-60% discount per kWh to new systems. Does that spread survive the two forces squeezing it from both ends: new LFP grid batteries falling toward $100-150/kWh installed (with Tesla Megapack pricing already down ~44% in 14 months by mid-2024), and automakers like GM waking up to the residual value of their own retired packs and repricing the feedstock — before Redwood converts its 'GWhs of backlog' into contracted revenue at a margin that justifies a $6B valuation?

Snapshot

Redwood Materials is JB Straubel’s answer to the question of what Tesla’s co-founder does after building the machine that made EVs real: build the machine that digests them. From Carson City, Nevada, Redwood grew into North America’s largest lithium-ion recycler — roughly 70% of the continent’s recycled battery material passes through it (Contrary Research, June 2025) — and used that feedstock to attack the part of the battery China actually controls: cathode active material. Then, in June 2025, it revealed a second act that has since swallowed the first: Redwood Energy, which reassembles used EV packs into cheap grid storage, starting with the largest second-life deployment in the world powering a Crusoe AI data center. That pivot attracted Nvidia and Google into a $425 million Series E closed January 28, 2026 at a $6 billion-plus valuation — and cost roughly 195 employees their jobs across two rounds of cuts (November 2025, April 2026) as Straubel restructured the company around storage. Redwood now sits at the exact intersection of the decade’s two biggest energy stories: the EV supply chain’s retreat and the AI power crunch’s advance.

Founding story

Straubel is the rare founder whose origin story is load-bearing. A Stanford energy-systems engineer who lost part of his face in a chemistry experiment as a kid and rebuilt junked electric golf carts for fun, he pitched Elon Musk on battery-powered flight over lunch in 2003, joined Tesla as employee No. 5 in 2004, and spent 15 years as CTO building its packs, drivetrains, and the Nevada Gigafactory. The Redwood insight came from standing inside that Gigafactory: battery manufacturing throws off enormous volumes of scrap — 5-10% of cell production — and every EV shipped is a rolling ore deposit that comes back in 12-15 years. Straubel incorporated Redwood in 2017, two years before he left Tesla in July 2019, and deliberately parked it in Carson City, 20 minutes from the Gigafactory whose scrap became its anchor feedstock via a Panasonic partnership. The framing he has used since — “urban mining,” extracting the same minerals from America’s junk drawers and crashed Teslas that would otherwise be dug up abroad (Fortune, November 2025) — is the founding thesis unchanged. What changed is which end of the loop pays: he began by selling recovered metals, and now increasingly sells the electrons the old packs can still hold.

How it works

Two loops, one campus. In the recycling loop, end-of-life packs and production scrap arrive at the ~300-acre Sparks/McCarran, Nevada campus. Packs are discharged, dismantled, and processed by mechanical separation and a reductive calcination step, then hydrometallurgy — a water-based chemical leach that dissolves the “black mass” (shredded electrode powder) into metal salt solutions, avoiding the energy and emissions of European-style smelting. Redwood says it recovers 95%+ of nickel, cobalt, and copper and over 80% of lithium (company, 2023-2025). The recovered metals feed downstream products: anode copper foil (production began early 2023) and cathode active material — the black powder that is roughly a third of a battery’s cost and almost entirely made in Asia. Qualification samples of CAM went to Panasonic for its Kansas plant, with Toyota and GM signed as future customers (2023-2024).

In the storage loop, the physics is different and the margin story better. About half the batteries arriving at Redwood still hold 50-80% of their original capacity — too degraded for a car, fine for a stationary application that cycles gently. Instead of shredding them, Redwood Energy tests each pack (thermal stability, electrical integrity, mechanical condition), then racks heterogeneous packs — different chemistries, ages, and states of health — into skids managed by proprietary power electronics and software that let mismatched, hot-swappable packs operate as one system while running (Latitude Media, 2025). Because the most expensive step — cell manufacturing — was already paid for by the original car buyer, industry estimates put second-life systems at a 30-60% per-kWh discount to new BESS (Energy-Storage.News, 2025). The showcase: a 12 MW / 63 MWh solar-charged microgrid at Sparks, built from hundreds of used EV packs, powering a Crusoe modular data center running 2,000 GPUs off-grid — deployed in about four months (June 2025), and expanded roughly sevenfold to 24 Crusoe Spark units and ~20 MW by March 2026. When the packs finally die, they roll next door into the recycler. The flywheel is the point: every storage deployment is future recycling feedstock Redwood already owns.

Product and business overview

Three named businesses. Recycling and critical minerals: collection and processing of end-of-life packs and manufacturing scrap from partners including Panasonic, Toyota, VW, Ford, Volvo, GM, BMW, Audi, and Amazon — 20 GWh of material processed in 2024, about 250,000 EVs’ worth (company/Contrary, 2025), plus a second recycling campus in Berkeley County, South Carolina (groundbroken January 2024, a planned $3.5 billion buildout; first phase added ~20,000 tonnes of annual capacity by late 2025). Battery materials: anode copper foil in production, cathode active material in qualification — the business the $2 billion DOE loan was meant to fund and the one whose engineering teams bore the April 2026 cuts. Redwood Energy: second-life (and new-cell) storage systems sold as fast-deploy power infrastructure for AI data centers and the grid — at launch in June 2025 it claimed over 1 GWh of reusable packs on hand, more than 1 GW of committed projects in the pipeline, and an expectation of 5 GWh more feedstock within a year; a July 2025 agreement with GM covers supplying new US-built GM batteries into Redwood storage systems alongside second-life packs.

Business model and pricing

The recycling business books revenue two ways: tolling/processing fees on partner feedstock, and sales of recovered metals and intermediates, which makes revenue an unhedged bet on lithium, nickel, and cobalt prices — the exact exposure that helped kill Li-Cycle and Ascend Elements when Chinese oversupply crushed materials prices in 2023-2025. Downstream CAM and foil are sold on long-term supply agreements (Toyota, Panasonic, GM), where the pitch is IRA domestic-content compliance rather than beating Chinese prices outright. Redwood Energy books revenue as storage systems and, increasingly, as a developer — Latitude Media reported in January 2026 that Redwood is moving toward owning and operating projects, which would convert one-time system sales into contracted energy revenue and is precisely what Google and Nvidia are underwriting. No storage pricing is published; the company’s positioning is “fast, low-cost storage,” with the discount to a Tesla Megapack (~$266/kWh mid-2024 and falling) doing the selling. The honest summary: a ~$200 million run-rate revenue business (2024, Contrary Research) carrying a $6 billion valuation on the promise of storage margins not yet demonstrated in public numbers.

Traction over time

The shape of that table is the story: the recycling metrics stopped being disclosed roughly when the storage metrics started being promoted.

Market analysis

The storage market Redwood pivoted into is enormous and compounding: BloombergNEF counted 112 GW / 307 GWh of global battery storage added in 2025 and forecasts ~158 GW / 459 GWh in 2026, with US data-center demand a fast-growing slice as interconnection queues push AI builders toward behind-the-meter microgrids — exactly the Crusoe configuration. The feedstock side is equally structural: Redwood expects over 100,000 EVs’ worth of packs to reach it in the near term, and the US EV fleet built in 2018-2023 starts retiring at scale in the 2030s. The market Redwood pivoted away from is the warning label: recycling feedstock today is roughly two-thirds manufacturing scrap (through 2030, per industry analyses), EV sales growth slowed after the US purchase credit died in 2025, and battery-materials prices collapsed under Chinese oversupply — the conditions that bankrupted two of the three US pure-play recyclers. The structural question for the storage business is timing: second-life supply is currently scarce relative to BESS demand, which is why the discount holds; if new-cell prices keep falling ~10%+ annually, the window in which used packs are meaningfully cheaper may be measured in years, not decades.

Competitive intel

See the frontmatter set for the full list; the shape is two different wars. In recycling, Redwood effectively won by attrition — Li-Cycle (creditor protection, May 2025) and Ascend Elements (Chapter 11, April 2026) proved that black mass and even direct-precursor cathode don’t clear their cost of capital at 2025 metals prices, leaving Cirba Solutions (EQT-backed, processing-focused, no cathode ambitions) as the main US survivor. Winning a market whose economics bankrupted the competition is an ambiguous prize, which is arguably why Straubel pivoted. In storage, Redwood is the insurgent, not the incumbent: Tesla’s Megapack and the Chinese integrators are riding a brutal new-cell cost curve, Fluence fights for the same utility-scale deals, and the counterparty risk is concentrated — Crusoe is both flagship customer and a buyer with alternatives. Redwood’s genuine edges: privileged access to used packs it already receives as the dominant recycler, power electronics that make heterogeneous packs behave, four-month deployment speed against multi-year interconnection queues, and a closed loop where competitors’ warranty liabilities are its raw material. Its genuine vulnerability: GM’s July 2025 deal shows automakers now see retired packs as an asset to be monetized, not waste to be tipped — feedstock priced at scrap today gets repriced the moment a second bidder shows up.

History and evolution

• 2017 — Straubel incorporates Redwood in Carson City while still Tesla CTO.
• Jul 2019 — Leaves Tesla; Redwood goes full time. Early Panasonic Gigafactory scrap deal anchors feedstock.
• 2020 — Amazon Climate Pledge Fund and Breakthrough Energy Ventures invest (~$40M raised to date).
• May-Jul 2021 — $700M+ Series C (T. Rowe Price) at a reported ~$3.7B; announces plan to make cathode and foil in the US, not just recycle.
• Feb 2022 — Ford and Volvo join a California EV-pack collection program; consumer electronics recycling opens.
• Feb 2023 — $2B DOE ATVM conditional loan commitment; first anode copper foil produced.
• Aug 2023 — $1B+ Series D at ~$5B (Goldman Sachs AM, Capricorn, T. Rowe).
• Jan 2024 — Breaks ground on the $3.5B South Carolina campus; GM and Toyota supply deals in hand.
• Late 2024 — Quietly walks away from the $2B DOE loan before drawdown, anticipating policy shifts under the incoming administration (Axios, May 2025).
• Jun 2025 — Launches Redwood Energy; unveils the 12 MW / 63 MWh Crusoe microgrid — the world’s largest second-life deployment.
• Jul 2025 — GM agreement to put new US-built GM cells into Redwood storage systems.
• Oct 2025 — $350M Series E first close led by Eclipse with Nvidia’s NVentures.
• Nov 26, 2025 — Cuts ~5% of staff (~60 people) weeks after the raise.
• Jan 28, 2026 — Series E closes at $425M, $6B+ valuation; Google joins; Redwood signals a shift toward owning and operating storage projects.
• Mar 2026 — Crusoe partnership expands ~7x to 24 Spark data centers, ~20 MW.
• Apr 21, 2026 — Lays off ~135 (10%), including cathode engineering; COO Chris Lister retires; Straubel tells staff parts of the company “expanded faster than needed” for the storage-first direction.

What people say

The case for. Investors and trade press treat Redwood as the category’s proof that vertical integration was the right call: while spoke-and-hub recyclers died selling commodity black mass, Redwood’s closed loop kept 70% share and produced actual products (Canary Media, Energy-Storage.News, 2025-2026). The Crusoe deployment drew broad praise as the first credible demonstration that heterogeneous second-life packs can run a real, revenue-generating AI load — Crusoe’s CEO publicly endorsed the expansion (March 2026), and the customer paying seven times more is the strongest review on file. Nvidia and Google buying in at $6B+ (October 2025-January 2026) is read as validation that storage-for-AI is the business, with Latitude Media reporting Redwood’s own CTO reversed his prior skepticism of second-life economics once the pack-level (rather than cell-level) integration approach proved out. Scottish Mortgage, a holder, highlighted the 2024 scale-up (20 GWh processed) as best-in-class execution.

The complaints. Glassdoor sits at 3.1/5 with only 44% recommending (88 reviews, 2026); recurring themes are a Tesla-derived “scrappy” culture read by chemical-plant staff as unsafe frugality — reviewers describe substandard equipment and instruments sourced from eBay — plus whiplash reorgs, people hired for one role and moved to another, and now two layoff rounds in five months, the second three months after a triumphant $425M close, which employees and press (TechCrunch, April 2026) noted lands poorly however it is framed. Sector skeptics make three arguments: the recycling business Redwood was valued on faces a feedstock desert — real end-of-life EV volume arrives after 2035-2040, and until then everyone fights over scrap (Canary Media, 2026); recycled and domestic cathode cannot beat Chinese CAM on price without subsidies Redwood declined to lock in when it walked from the DOE loan; and second-life storage is a temporary arbitrage — financiers still balk at warranting used packs of mixed provenance, and ever-cheaper new LFP compresses the discount annually (Volts/Canary Media, 2025). The cathode-team layoffs read to critics as Redwood conceding the original thesis’s timeline.

Outlook: the open question

Redwood works if the second-life spread holds long enough to become a contracted development business: used packs keep arriving at near-scrap cost through its recycling gravity well, the power-electronics layer keeps heterogeneous packs performing to data-center reliability standards, and the “GWhs” of backlog convert in 2026-2027 into owned, revenue-generating projects with Crusoe-class customers — at which point Redwood is an energy developer with a free fuel source and a captive end-of-life disposal loop no Megapack competitor can copy. The Nvidia and Google money is a bet on exactly that conversion, and the April 2026 restructuring shows Straubel is betting the company on it too. Redwood fails — or deflates to a niche recycler — if the spread collapses: new LFP system prices falling toward $100-150/kWh installed erase the used-pack discount, automakers like GM reprice retired packs once they see Redwood’s margin, financiers keep refusing to underwrite mixed-provenance batteries at scale, and the storage backlog converts slowly while the legacy recycling business — its own economics indicted by two competitor bankruptcies — burns cash waiting for an end-of-life EV wave that doesn’t crest until the 2030s. The tells to watch: whether Redwood discloses a real storage revenue or deployed-MWh number for 2026 (it has gone quiet on recycling metrics; silence on storage metrics by year-end would rhyme), whether any customer beyond Crusoe signs at double-digit-MW scale, and whether the next capital event is an IPO on storage economics or another private round that quietly reprices the recycler.

Sources and further reading

• Redwood attracts Google for its $425M Series E as AI power needs rise (TechCrunch, January 28, 2026)
• Exclusive: Redwood Materials lays off 10% in restructuring to chase energy storage business (TechCrunch, April 21, 2026)
• Redwood Energy: Fast, low-cost storage to power the age of AI and a changing grid (Redwood Materials, June 2025)
• Crusoe and Redwood Materials unveil world’s largest second-life battery deployment (Crusoe, June 2025; expansion announced March 2026)
• Report: Redwood Materials Business Breakdown & Founding Story (Contrary Research, 2025)
• Why battery recycling company Redwood Materials walked away from a $2B DOE loan (Axios Pro, May 21, 2025)
• Battery recycling still isn’t easy. Just ask Ascend Elements. (Canary Media, April 2026)
• Why Redwood Materials’ CTO changed his mind about second-life grid storage (Latitude Media, 2025)
• As Redwood Materials shifts into developing storage, Google invests (Latitude Media, January 2026)
• Tesla cofounder leads U.S. ‘urban mines’ to compete with China (Fortune, November 27, 2025)
• Can “second life” EV batteries work as grid-scale energy storage? (Volts, 2025 — the skeptic’s questions)
• Redwood Materials reportedly cuts 5% of staff after $350M raise (TechCrunch, November 26, 2025)