Redwood Materials raises $425M to scale energy storage business

Redwood Materials, a battery recycling and materials startup founded in 2017 by former Tesla CTO JB Straubel, has secured $425 million in Series E funding. The capital will be used to scale Redwood Energy, the company’s energy storage business unit launched in June 2025. New investor Google and existing backer Nvidia joined the funding round. Though Redwood initially focused on creating a circular supply chain for batteries—recycling scrap to produce cathodes (components produced for battery cells) for customers like Panasonic—its energy storage division has quickly become its fastest-growing business unit. In a blog post on Thursday, the company stated that the expansion will support a wave of energy storage deployments related to data centers, fueled by the ongoing artificial intelligence data center building boom.

Data center developers face challenges securing reliable electricity. Claire McConnell, vice president of business development at Redwood Materials, noted that developers are experiencing grid delays. “When they’re trying to connect to the grid, they are being told it is going to take five-plus years to get that and at the same time, you’re seeing this massive demand to build more data centers and compete in the AI race,” McConnell said. To bypass these delays, Redwood is deploying energy storage systems that repurpose electric vehicle batteries collected through its recycling operations. The unit’s first customer is Crusoe, a startup in which Straubel invested in 2021. Redwood has deployed an energy storage system for Crusoe that generates 12 MW of power and has 63 MWh of capacity. This system sends power to a modular data center built by Crusoe, a company known for its large-scale data center campus in Abilene, Texas—the initial site of the Stargate project.

Redwood is targeting larger deployments for hyperscalers—companies that operate massive cloud computing data centers. McConnell noted that the company is working on energy storage systems in the hundreds of megawatt hours, with multiple gigawatt hours in its pipeline. To support this growth, Redwood has expanded its operations:

• San Francisco facility: An R&D facility that opened in April 2025, recently expanded to a 55,000-square-foot space where engineers integrate hardware, software, and power electronics.
• San Francisco workforce: The facility now employs nearly 100 people.
• Total workforce: Redwood employs 1,200 people across its broader operations, which include its headquarters in Carson City, Nevada, and a facility near Reno.

Why it matters

The AI data center boom is creating an immediate demand for electricity, but developers face grid connection delays of five-plus years. Redwood Materials is positioning its energy storage business to bridge this gap, turning a recycling startup into an infrastructure provider for the AI era.