Redwood Materials raises another $350 million to boost its energy storage business

Battery recycling and cathode production company Redwood Materials has raised $350 million as it develops its new energy storage business in an effort to support the artificial intelligence data center boom.

The Series E round, led by venture firm Eclipse, also included a new strategic investment by NVitures, the venture capital arm of Nvidia. The company’s valuation was not disclosed, but a source familiar with the round told TechCrunch that the valuation was around $6 billion, $1 billion higher than the previous valuation.

The funds will be used to expand the company’s thriving energy storage business as well as its refining and materials production capacity. Redwood, founded by former Tesla CTO JB Straubel, also plans to hire more engineers and staff for its operations team.

When Redwood Materials was founded in 2017, it set out to create a circular supply chain for batteries by focusing on recycling scrap generated by the production of battery cells and consumer electronics such as cell phone batteries and laptops. This business – which continues to grow – involves processing those discarded goods and extracting materials such as cobalt, nickel and lithium that would normally be mined. Redwood supplies these materials back to its customers, which include Panasonic, General Motors and Toyota.

Redwood has since added new related activities such as cathode production. More recently, it launched an energy storage company that uses the thousands of electric car batteries it collects to provide power to businesses. This business, called Redwood Energy, is largely geared toward serving AI data centers as well as other large-scale industrial sites.

Redwood has huge amounts of electric vehicle batteries that have too long of a life left to process recycling. The company connects these retired electric vehicle batteries to renewable energy sources like wind and solar to create an off-grid system that sends power to AI data centers or industrial sites. The system can be connected to the grid, and Redwood says electric vehicle batteries could also be connected to natural gas turbines or future nuclear generators for large-scale energy storage.

It has a lot of supply. The company recovers more than 70% of all used or discarded battery packs in North America, and not all of them are immediately recycled. As of June, Redwood has stocked more than 1 gigawatt-hour of batteries that can be used for energy storage. By 2028, the company plans to deploy 20 gigawatt-hours of grid-scale storage, putting it on track to become the largest recycler of used electric vehicle battery packs.