Redwood Materials Cuts 10% of Workforce to Pivot Toward Energy Storage

Battery recycler Redwood Materials has laid off approximately 135 employees, representing about 10% of its workforce, as part of a strategic restructuring. The move, announced April 21, 2026, is designed to accelerate the company's shift toward its rapidly growing energy storage business. This marks the second round of cuts in five months for the company founded by former Tesla CTO JB Straubel.

The Details

The layoffs impact multiple divisions, including engineering and operations. In an internal email, CEO JB Straubel stated that certain parts of the company had expanded faster than necessary to support Redwood's current direction. Despite the cuts, Straubel maintained that the company is in its strongest position to date, asserting that the materials business is moving toward profitability.\n\nThe restructuring specifically targets the expansion of Redwood Energy, the company's energy storage unit launched in June 2025. This division has quickly become the firm's fastest-growing unit, driven by the increasing demand for grid-scale storage. Redwood's energy strategy focuses on 'second-life' EV battery packs, repurposing used cells for stationary storage.\n\nRecent projects highlight this pivot. At its Sparks, Nevada campus, Redwood has deployed a 12 MW / 63 MWh microgrid consisting of 792 second-life EV packs to power a Crusoe AI data center. Additionally, on April 14, 2026, the company announced a partnership with Rivian to install a 10 MWh battery system at Rivian's manufacturing plant in Normal, Illinois.\n\nTo support this transition, Redwood has significantly expanded its San Francisco R&D facility. The site has grown four-fold to 55,000 square feet and now employs nearly 100 people focusing on the integration of hardware, software, and power electronics.\n\nEmployees affected by the April layoffs are receiving severance, paid health benefits, and career transition assistance. The company's Chief HR Officer noted the cuts were intended to 'sharpen' the focus and size of teams to align with the company's future roadmap.

Context

The move comes amid significant volatility in the battery industry. Several US battery manufacturers have recently restructured or ceased operations as the automotive industry scales back some of its more ambitious EV transition timelines. Notably, competitor Ascend Elements filed for Chapter 11 bankruptcy protection in early April 2026, citing insurmountable financial challenges.\n\nRedwood Materials, founded in 2017, has navigated these headwinds with substantial capital backing. In January 2026, the company closed a $425 million Series E funding round, which valued the firm at over $6 billion. This round included a new investment from Google, joining existing backers such as Nvidia.\n\nThis is the second time Redwood has reduced its headcount recently; in November 2025, the company cut roughly 60 employees, or 5% of its staff, shortly after an initial $350 million raise. The broader market shift reflects a critical need for energy storage, with US projections suggesting a requirement for over 600 GWh of storage by 2030 to handle AI-driven load surges and peak demand.

What's Next

Redwood is expected to further deepen its integration with major automakers. The company has already signed a Memorandum of Understanding (MOU) with General Motors to repurpose GM's EV batteries into grid-scale storage systems.\n\nThe company's focus will likely remain on the intersection of AI and energy. As data center electricity demand accelerates faster than the national grid can expand, Redwood's microgrid solutions for AI providers like Crusoe are positioned as a critical bottleneck solution.\n\nInvestors will be watching to see if the shift toward energy storage allows Redwood to reach the profitability Straubel claims is within reach, especially as the core EV battery recycling market faces continued instability.