Redwood Materials
Redwood Materials recycles EV batteries and repurposes them into energy storage for data centers and grids.
On the record
Checkpoint: GM energy storage deal and next storage gross-margin disclosure
The call
Redwood controls most of North America's used battery stream, but its energy storage pivot is running through layoffs, a COO exit, and rivals chasing the same contracts.
Redwood Materials collects used lithium-ion batteries from cars and other sources, then recycles them to recover valuable metals like lithium and cobalt. The company has locked in deals with major automakers (Ford, GM, Toyota, Volkswagen) and got a $2 billion loan from the U.S. government, which gives it real advantages that are hard to copy right now. But the company is also trying to move into energy storage (batteries that hold power for data centers and other businesses), and that push is causing stress: it has cut staff twice in five months and lost its chief operating officer, which suggests execution is getting messy. Li-Cycle and other recycling companies are well-funded and hunting the same automaker contracts, and companies like Form Energy are already winning deals in the energy-storage space that Redwood wants to own. The one thing that would change everything is whether Redwood can actually make money selling energy-storage systems at the scale it needs, before money dries up or a competitor blocks it out of the next big deal.
Why
01
AI pressure: None apparent. AI data centers are feeding Redwood, not eating it: Crusoe and Google are customers and investors in its storage pivot. Could AI do the core job? Unlikely.
02
Bigger players: Li-Cycle (recapitalized by Glencore) and Ascend Elements. Well-funded rivals are scaling their own collection and OEM offtake deals, aiming at the same battery stream Redwood depends on. Could a giant copy it? Probably.
03
What protects it. Locked-in OEM offtake deals with Ford, GM, Toyota, VW, Panasonic plus a $2B DOE loan tied to its own U.S. plants.
What would change this call
Redwood discloses energy-storage segment gross margin in a quarterly or annual filing. Shows whether the storage pivot is profitable or still subsidized by recycling revenue.
Li-Cycle or Ascend Elements announce new OEM battery-collection contracts in North America. Would indicate erosion of Redwood's 70-90% collection-share moat.
A third layoff round or additional senior executive departure at Redwood within six months. Would signal the 2026 restructuring failed to stabilize the organization.
Li-Cycle or Ascend Elements announce new OEM battery-collection contracts in North America. Would indicate erosion of Redwood's 70-90% collection-share moat.
A third layoff round or additional senior executive departure at Redwood within six months. Would signal the 2026 restructuring failed to stabilize the organization.
Key numbers
- $6B valuation after Series E and E-II close
- $2B conditional DOE loan for battery plants
- ~135 employees cut in second 2026 layoff round
Named risks
- Energy storage pivot may be gross-margin negative and subsidized rather than profitable.
- Collection-share erosion as Li-Cycle and Ascend Elements scale North American contracts.
- Repeated layoffs (Nov 2025, Apr 2026) and COO exit signal restructuring has not stabilized.
- Dependence on $2B DOE loan and IRA domestic-content incentives exposed to US policy shifts.
- Potential down-round if next capital raise reprices below ~$6B valuation.
Rivals, as read in July 2026
| Rival | Direction | Evidence |
|---|---|---|
| Li-Cycle | gaining on | Received $475M Glencore-backed recapitalization in 2025, chasing same OEM offtake deals |
| Ascend Elements | gaining on | Landed over $1 billion in domestic recycling contracts as of 2025 |
| Form Energy | contesting | Signed 12GWh multi-day storage deal with Crusoe, Redwood's own flagship customer, March 2026 |
| Glencore, Albemarle, Umicore | contesting | Mining majors overlap Redwood's critical-minerals space rather than entering recycling directly, 2025-2026 |
Questions people ask
- Is Redwood Materials profitable in 2026?
- No. Redwood Materials was reported as still cash-burning as of October 2025 by Contrary Research, despite roughly $200 million in 2024 run-rate revenue against a $6 billion valuation reached in its October 2025 Series E close.
- Is Redwood Materials laying off employees?
- Yes. Redwood cut about 5 percent of staff (~60 people) in late November 2025, then about 10 percent (~135 people) in April 2026 as it restructured to prioritize its energy storage division, alongside COO Chris Lister's April 2026 departure.
- Who owns Redwood Materials, is it public?
- Redwood Materials is privately held, founded in 2017 by Tesla co-founder J.B. Straubel. It is backed by venture and strategic investors including Eclipse Ventures, Nvidia's NVentures, and Google, reaching a roughly $6 billion valuation as of January 2026.
- Could AI replace Redwood Materials' business?
- Unlikely to replace it. Redwood's core moat is physical: it recovers 70-90% of North America's discarded lithium-ion battery packs, plus OEM offtake contracts and a $2 billion DOE loan tied to specific US plants, as of October 2025. AI is used internally only for sorting.
- Who is Redwood Materials' biggest competitor?
- Li-Cycle and Ascend Elements are the closest direct rivals in North American battery recycling. Li-Cycle received a $475 million Glencore-backed recapitalization in 2025, while Ascend Elements has landed over $1 billion in contracts as of 2025.
- What is Redwood Materials worth?
- Redwood Materials was valued at roughly $6 billion following its $350 million Series E close on October 23, 2025, a valuation that held through a January 28, 2026 extension that brought the total round to $425 million with Google joining as an investor.
Timeline
- 2026-06-09GM signs deal for 7.2 MWh Redwood Energy storage system at Milford Proving Ground
- 2026-04-23COO Chris Lister departs amid restructuring
- 2026-04-21Redwood lays off about 10% of staff (~135 employees) to prioritize energy storage
- 2026-03-24Crusoe partnership expands from 4 to 24 modular data centers, about 7x capacity
- 2026-01-28Series E extended to $425M total; Google joins as investor at ~$6B valuation
- 2025-11Redwood lays off about 5% of staff (~60 employees) shortly after Series E close
- 2025-10-23Series E closes at $350M led by Eclipse Ventures with Nvidia NVentures, ~$6B valuation
- 2025-06-26Redwood Energy division launches to repurpose second-life EV batteries for grid storage
- 2023-08Series D raises ~$1B at reported $5.3B valuation
- 2023-02-09Redwood wins $2B conditional DOE loan for domestic battery-materials facilities
Revision history
29 July 2026
First assessed. Losing its protection. The text above is fixed as of this date and is not edited afterwards.
In the same band
Sources
- Redwood Materials raises another $350M (2025-10-23)
- Redwood attracts Google for its $425M Series E (2026-01-28)
- Redwood Materials Business Breakdown (2025-10-23)
- Nevada battery recycler wins $2B loan from Energy Department (2023-02-09)
- Redwood Materials
- Redwood Materials Stock Price, Funding, Valuation (2026-01-27)
- Battery recycling company wins $2B loan (2023-02-09)
- An AI data center boom is fueling Redwood's energy storage business (2026-02-19)
- Redwood Materials cuts 5% staff after $350M raise amid AI pivot
- Redwood Materials lays off 10% in restructuring (2026-04-21)
- Redwood Materials loses COO amid layoffs, restructuring (2026-04-23)
- Fast, low-cost storage to power the age of AI and a changing grid (2025-06-26)