Redwood Materials Announces Workforce Restructuring Amid Market Shifts and Growth Ambitions
In a move that underscores the challenges and opportunities facing the burgeoning battery recycling and energy storage sectors, Redwood Materials, a leading U.S.-based battery recycling company, has announced the layoff of approximately 135 employees, representing roughly 10% of its workforce. The decision comes as part of a broader restructuring effort aimed at aligning the company’s operations with its rapidly growing energy storage business, according to internal communications obtained by TechCrunch.
Founded by former Tesla Chief Technology Officer JB Straubel, Redwood Materials has positioned itself as a key player in the transition to a sustainable energy future. The company specializes in recycling lithium-ion batteries and extracting critical materials like nickel, cobalt, and lithium for reuse in new batteries. In recent years, it has expanded into energy storage, leveraging its expertise to supply recycled battery materials for data centers and electric vehicle (EV) manufacturers.
The latest workforce reduction follows a previous round of layoffs in November 2025, when the company cut 5% of its staff. At the time, Redwood had recently secured $425 million in a Series E funding round, catapulting its valuation to over $6 billion. The January 2026 funding was led by Google, with proceeds earmarked to support the company’s ambitious plans to scale its recycling and energy storage operations.
However, the broader battery industry has faced significant headwinds in recent months. Earlier this month, Ascend Elements, another U.S. battery recycler, filed for Chapter 11 bankruptcy protection, citing “insurmountable” financial challenges. Meanwhile, some battery manufacturers and EV startups have struggled to stay afloat as the U.S. automotive industry recalibrates its timelines for transitioning to electric vehicles. These market dynamics have created a challenging environment for companies operating in the battery ecosystem.
In an email to employees unaffected by the layoffs, Straubel sought to reassure staff that the restructuring does not signal financial distress. “Redwood today is the strongest it’s ever been,” he wrote. “The materials business is well on its way to profitability and has an exciting roadmap ahead.” Straubel emphasized the company’s continued dominance in the U.S. battery recycling market and highlighted its “great momentum” in the energy storage sector.
Redwood’s energy storage business has gained traction in recent months, with the company securing high-profile partnerships with Crusoe AI and electric automaker Rivian. These agreements involve supplying recycled batteries to power data centers and manufacturing facilities, underscoring Redwood’s ability to pivot and capitalize on emerging opportunities in the energy sector.
Straubel acknowledged that parts of the company had expanded too quickly relative to its strategic priorities. As a result, the layoffs targeted multiple divisions, including engineering and operations, according to an anonymous employee familiar with the matter. “We are confident that we can deliver on our critical projects with a smaller team that is more focused,” Straubel wrote. “We have successfully adapted to changes in the market that have bankrupted many of our competitors.”
The laid-off employees will receive severance packages, paid health benefits, and career transition assistance, as outlined in Straubel’s email. “I am grateful to the approximately 135 employees who we say goodbye to today—they’ve all contributed to building Redwood,” he added.
Redwood’s restructuring reflects broader trends in the battery and energy storage industries, where companies are grappling with fluctuating demand, intense competition, and evolving market dynamics. Despite these challenges, Redwood remains optimistic about its long-term prospects. “This is a self-sustaining business and will continue to make this company more valuable over time,” Straubel wrote. “We have the team and the technology to do what no other company can.”
The company’s ability to navigate these turbulent waters will depend on its capacity to execute its dual focus on battery recycling and energy storage while maintaining financial discipline. As the global push toward electrification and sustainability continues, Redwood Materials aims to cement its role as a critical player in the transition to a circular economy for batteries and energy storage solutions.
While the layoffs may raise questions about the company’s short-term trajectory, Straubel’s confident tone suggests that Redwood is positioning itself for long-term success in an increasingly competitive and complex industry. Whether this latest round of restructuring will prove to be a strategic masterstroke or a cautionary tale remains to be seen, but for now, Redwood Materials appears determined to stay ahead of the curve in the race to power the future.
