Just weeks after closing a massive $350 million funding round, Redwood Materials is cutting around 5% of its workforce - roughly 60 employees out of 1,200 total staff. The layoffs come as JB Straubel's battery recycling company pivots hard into AI data center energy storage, raising questions about execution challenges despite its $6 billion valuation.
Redwood Materials just delivered a harsh reality check to the battery recycling industry. The Nevada-based startup, fresh off a $350 million Series E that valued it at $6 billion, is reportedly cutting around 5% of its workforce - affecting roughly 60 employees out of its 1,200-person team, according to Bloomberg News.
The timing couldn't be more awkward. Just last month, Redwood announced the massive funding round specifically to fuel its expansion into energy storage products for AI data centers. Now, weeks later, the company's trimming staff while simultaneously trying to scale into one of the hottest sectors in tech.
Founded in 2017 by former Tesla CTO JB Straubel, Redwood built its reputation recycling battery scraps and extracting valuable materials like cobalt, nickel, and lithium to sell back to manufacturers including Panasonic. It was a solid, if unglamorous, circular economy play that made perfect sense as EV adoption accelerated.
But the AI boom changed everything. Suddenly, those recycled batteries weren't just raw materials - they were potential energy storage goldmines for power-hungry data centers. Redwood pivoted fast, launching an entirely new business line that repurposes old EV batteries into grid-scale storage systems. As of June, the company had stockpiled over 1 gigawatt-hour worth of batteries specifically for this market.
The math seemed compelling. AI data centers are projected to consume 8% of total U.S. electricity by 2030, creating massive demand for backup power and grid stabilization. Microsoft, Google, and Amazon are all scrambling to secure reliable energy storage for their AI infrastructure buildouts.
Yet here's Redwood, cutting staff just as it tries to capitalize on this opportunity. The layoffs suggest the company might be hitting execution challenges as it attempts to run two different businesses simultaneously - the established recycling operation and the newer, more complex energy storage division.
