By William Gavin
J.B. Straubel's Redwood Materials has secured some high-profile backers as AI makes energy storage more critical
Redwood Materials founder J.B. Straubel was Tesla's fifth employee and its first chief technology officer.
Redwood Materials, a battery-recycling company launched by Tesla co-founder J.B. Straubel, has secured a new high-profile investor as it seeks to meet the growing demand for energy.
The Carson City, Nevada-based company on Wednesday said it has completed its Series E fundsing round, which is now valued at $425 million after participation from Alphabet-owned Google (GOOGL) and other backers.
That round initially drew $350 million from investors such as venture-capital firm Eclipse and Nvidia's (NVDA) venture-capital arm, as Redwood previously disclosed.
The company has said it will use some of the cash injection to expand its energy-storage business, which launched last June under the name Redwood Energy. That part of the company seeks to meet the escalating demand for energy driven largely by artificial-intelligence data centers.
Read: Trump's crusade against Big Tech's energy spending highlights a problem with no easy answers
In December, BloombergNEF estimated that the need for electricity from U.S. data centers will grow to 106 gigawatts by 2035. That's more than three times as much electricity as was needed in 2024 and will likely put immense strain on the U.S. power grid.
Redwood said it recovers about 90% of all lithium-ion batteries and battery materials recycled in North America. Its core business involves taking out key minerals, such as cobalt and nickel, and selling those components back to partners.
The energy business changes that. Now Redwood doesn't plan to take all electric-vehicle battery packs apart immediately. Instead, it will repurpose some of them to help power microgrids for customers like AI-infrastructure firm Crusoe.
&#34;As electricity demand surges - driven by AI, data centers, manufacturing and electrification - energy storage is no longer optional; it is essential infrastructure,&#34; Redwood said in a statement on Wednesday.
Big Tech firms like Google have been pouring cash into data centers but are now grappling with the issue of how to power them. That has led some of those companies to invest in alternative energy sources, such as nuclear energy, and even to consider putting data centers in space that can draw power from the sun.
Tesla (TSLA) and SpaceX CEO Elon Musk said last week that his companies are separately working to &#34;build to 100 gigawatts a year of solar power&#34; in the U.S., which he said would take &#34;about three years.&#34; Tesla had earlier said that its energy generation and storage business is benefiting from the growing demand to use its products for data centers.
Read: When Tesla reports earnings, this could be the biggest highlight
-William Gavin
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01-28-26 1305ET

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<p>Redwood Materials, founded by Tesla co-founder J.B. Straubel, has raised $425 million in its Series E funding round, with significant investment from Google. The funds will be used to expand its energy-storage business, which aims to meet the increasing electricity demand from AI data centers. As electricity needs are projected to triple by 2035, Redwood plans to repurpose electric vehicle batteries for energy storage, emphasizing the essential role of energy infrastructure in supporting the surge in demand driven by AI and data centers.</p>

- Redwood Materials, founded by Tesla co-founder J.B. Straubel, has secured $425 million in Series E funding to meet rising energy demands.  
- The funding, backed by investors like Google and Nvidia, will help expand its energy-storage business, which targets the increasing electricity needs driven by AI data centers.  
- As electricity demand surges, Redwood plans to repurpose some electric-vehicle batteries for microgrid power, marking a shift from solely recycling materials.

Google is backing a Tesla founder's push to power AI data centers