The AI data center explosion is creating an unexpected winner in the battery recycling space. Redwood Materials, the company founded by Tesla's former CTO JB Straubel, just revealed that its energy storage division has become its fastest-growing business unit, fueled entirely by surging demand from power-hungry AI infrastructure. The development marks a major strategic shift for a company previously known primarily for recycling EV batteries, and signals how the AI boom is reshaping the entire energy ecosystem.
Redwood Materials is riding an unlikely wave. The Nevada-based battery recycling company, founded by Tesla co-founder JB Straubel in 2017, built its reputation on closing the loop for electric vehicle batteries. But according to an exclusive report from TechCrunch, the company's new energy storage business has exploded past its core EV recycling operations to become its fastest-growing division.
The catalyst? An insatiable appetite for reliable power at AI data centers, where massive GPU clusters training large language models demand grid stability that traditional power infrastructure struggles to provide. Data centers running AI workloads can see power demands spike unpredictably, creating exactly the kind of load-balancing nightmare that battery storage systems were designed to solve.
Redwood's timing couldn't be better. The company spent years perfecting battery recycling processes that recover lithium, cobalt, and nickel from spent EV batteries. Those recovered materials now flow directly into new battery production for stationary energy storage - creating a circular supply chain that appeals to hyperscalers desperate to hit sustainability targets while scaling AI infrastructure.
The energy storage pivot represents a dramatic expansion beyond Redwood's original mission. The company operates North America's only large-scale battery recycling facility and has raised over $2 billion from investors including T. Rowe Price and Goldman Sachs. That war chest now funds a dual strategy: recycling batteries from the growing fleet of aging EVs while simultaneously manufacturing storage systems for an entirely different market.
Data center operators face a brutal math problem. Training frontier AI models can consume megawatts of power in concentrated bursts, but most electrical grids weren't designed for such volatile demand patterns. Battery storage systems act as shock absorbers, charging during off-peak hours and discharging when AI workloads spike. For data center developers racing to bring new facilities online, pairing renewable energy with storage has become table stakes for securing permits and power purchase agreements.
