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By William Gavin

Redwood Materials plans to meet the AI-fueled demand for energy with recycled electric-car batteries

J.B. Straubel is a former Tesla executive who left to focus on his energy startup, Redwood Materials.

A previous version of this report incorrectly listed Redwood’s valuation as of a 2023 funding round.

The battery-recycling company founded by an ex-Tesla Inc. executive can count a high-profile artificial-intelligence company among investors in its latest funding round.

Redwood Materials said Thursday it had raised $350 million in a round led by the venture-capital firm Eclipse and Nvidia Corp.’s (NVDA) venture-capital arm, NVentures. Nvidia’s contribution to the round was not disclosed, and a representative did not immediately return a request for comment.

The fundraise comes as major AI players are scrambling to meet their power needs and as the U.S. is facing difficulties building out domestic mineral-supply chains. Currently, China is – by far – the dominant force in the global supply chains for cobalt, nickel and other minerals. And rising tensions between China and the U.S. have stoked worries that some companies, including carmakers, may get cut off from lithium-ion batteries and battery materials.

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“This is a pivotal time for both Redwood and the United States, as curtailment in international supplies overlaps with intense domestic demand growth for these same materials and energy products,” the company said in a statement.

Redwood said it would use the new cash to expand its growing energy-storage business, which it launched in June under the name Redwood Energy and which seeks to meet the quickly escalating demand for energy needed for AI data centers. By 2030, global power demand from data centers is set to grow 165% compared with 2023, according to Goldman Sachs.

“AI is several things. AI is energy, AI is chips, the models and the application,” Nvidia CEO Jensen Huang said in a recent interview with CNBC’s “Squawk Box.” “And we need more energy.”

Redwood believes it already has the supply chains necessary to match its ambitions. The company has said it receives batteries equivalent to 250,000 electric vehicles annually, or about 90% of all lithium-ion batteries and battery materials recycled in North America.

Redwood’s core business involves recycling scrap from consumer electronics and batteries, extracting minerals like cobalt and nickel and selling those components back to partners and battery suppliers, including Toyota Motor Corp (JP:7203).

Now it says it won’t take battery packs apart immediately, instead diverting what power remains to fuel low-cost, large-scale energy-storage systems. Once that energy is fully drained, the batteries are sent to be scrapped for parts as usual.

“Low-cost, large-scale battery energy storage has emerged as the most immediate and scalable solution to enable AI factory deployment and unlock stranded grid and generation capacity,” Redwood said in a statement.

Redwood was founded in 2017 by J.B. Straubel, a Tesla (TSLA) co-founder and executive who left the company to scale his startup. Straubel’s former employer is also seeking to meet growing energy demand.

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Beyond expanding its energy business, Redwood said it will also use the new capital to expand its refining and material-production capacity and build out its engineering and operations teams. The company was valued at $5 billion in late 2023, following its previous fundraising round, according to TechCrunch.

The company is currently valued at about $6 billion, according to a source familiar with the matter.

-William Gavin

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  10-24-25 1518ET
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