Redwood Materials Lands Google in $425M AI Power Bet
Redwood Materials has secured a $425 million Series E funding round with Google joining as a strategic investor to scale energy storage systems for AI data centers. Founded by former Tesla CTO JB Straubel, the Nevada-based startup is repurposing second-life electric vehicle batteries into microgrids that deliver reliable, cost-competitive power exactly when and where artificial intelligence infrastructure needs it most. The expanded round—initially $350 million in October—now pushes Redwood's total capital raised to $4.9 billion as global data center electricity consumption approaches 1,000 terawatt-hours in 2026.
Credit: Kirsten Korosec
Why Google Just Bet Big on Battery Recycling
Google's entry into Redwood's cap table isn't about recycling alone—it's about resilience. As AI workloads strain regional power grids, tech giants face an urgent challenge: how to keep data centers running during peak demand spikes or grid instability without relying solely on diesel generators or expensive utility upgrades. Redwood's emerging energy storage division offers a circular solution. By deploying repurposed EV batteries that still hold 70–80% of their original capacity, the company creates modular microgrids capable of delivering backup power, smoothing demand charges, and even feeding excess solar energy back to facilities during daylight hours. For Google, which operates some of the world's most energy-intensive AI infrastructure, this represents both a sustainability win and an operational insurance policy against power volatility.
From Scrap Collector to Full-Stack Battery Powerhouse
Redwood's journey began modestly in 2017 with a singular mission: close the loop on lithium-ion batteries. Straubel started by collecting manufacturing scrap and spent consumer electronics—discarded phone and laptop batteries destined for landfills. His team developed hydrometallurgical processes to extract nickel, lithium, cobalt, and copper at industrial scale, then sold these refined materials back to battery makers like Panasonic. But recycling alone couldn't solve the looming materials shortage threatening the EV revolution. So Redwood vertically integrated. First came domestic cathode production in Nevada—the critical component determining battery energy density and lifespan. Then, recognizing a parallel opportunity in energy storage, the company launched its second-life battery division last summer. Today, Redwood operates a true circular ecosystem: collect, refine, manufacture cathodes, deploy storage systems, then recycle those same batteries years later when their second life ends.
AI's Insatiable Appetite for Electricity
The timing of Google's investment aligns with a perfect storm in energy markets. Global data center power consumption is projected to double between 2022 and 2026, driven overwhelmingly by AI training clusters and inference workloads requiring massive computational throughput. A single large AI model training run can consume as much electricity as dozens of homes use in a year. Compounding the challenge, these facilities demand near-100% uptime—any grid interruption risks costly training interruptions or service outages. Traditional solutions like natural gas peaker plants face permitting delays and emissions scrutiny. Battery storage, particularly using already-manufactured second-life cells, offers near-instantaneous response times and zero operational emissions. Industry analysts forecast a 300-gigawatt-hour boom in AI data center battery storage demand through 2028 creating a multi-billion dollar addressable market almost overnight.
Second-Life Batteries: Smarter Economics, Faster Deployment
What makes Redwood's approach uniquely compelling is economics. CEO JB Straubel stated in mid-2025 that his company can deliver electricity from second-life battery projects at costs "below the utility" rate—a game-changing threshold for data center operators battling rising power bills. These batteries aren't brand new, but they're far from dead. EVs typically retire packs at 70–80% capacity because drivers demand maximum range. For stationary storage applications where weight and size matter less, that remaining capacity represents 5–10 years of valuable service life. Redwood's first commercial deployment—a 12-megawatt, 63-megawatt-hour microgrid supporting an AI data center—stands as the world's largest second-life battery installation to date. The system charges during off-peak hours or via on-site solar, then discharges during expensive afternoon demand peaks, effectively arbitraging electricity prices while providing critical backup capability.
Inside Redwood's Nevada Command Center
At its Carson City headquarters, Redwood has built more than a recycling plant—it's a proving ground for circular industrial design. Conveyor belts carry black mass (the powdery intermediate material from shredded batteries) through refining tanks that separate elemental metals with 95%+ recovery rates. Nearby, cathode production lines coat aluminum foil with nickel-manganese-cobalt formulations tailored for specific customer requirements. But the newest wing tells the future story: a staging area where technicians test, reconfigure, and integrate thousands of retired EV battery modules into standardized storage containers. Each container functions as a plug-and-play power block, shipped directly to data center sites and synchronized via cloud-based energy management software. This vertical integration—from raw material recovery to turnkey storage deployment—gives Redwood unprecedented control over cost, quality, and scalability compared to competitors relying on fragmented supply chains.
What $4.9 Billion Buys in the Energy Transition
With total funding now approaching $5 billion, Redwood is executing one of the most capital-intensive industrial builds in clean tech history. The money fuels three parallel tracks: expanding recycling capacity to process over 100,000 tons of battery material annually by 2027; scaling cathode production to supply multiple gigafactories; and rapidly deploying second-life storage projects across North America. Crucially, this Series E round values the company at over $6 billion—more than $1 billion above its previous valuation—signaling investor confidence that Redwood's circular model transcends niche recycling to become foundational infrastructure for the AI era. Strategic backers like Google and Nvidia aren't just writing checks; they're reserving capacity. In an energy-constrained future, securing reliable, sustainable power may prove as critical to AI dominance as algorithmic breakthroughs.
Powering the AI Century Responsibly
Redwood's convergence of circular economy principles and AI infrastructure needs arrives not a moment too soon. As nations grapple with critical mineral shortages and grid modernization delays, repurposing existing battery assets offers a pragmatic bridge toward full decarbonization. For data center operators, second-life storage provides immediate resilience without waiting years for new transmission lines or renewable projects to come online. And for consumers, every EV battery getting two productive lives instead of one reduces the environmental footprint of the entire transportation-electrification transition. Straubel's original vision—to eliminate battery waste entirely—has evolved into something even more ambitious: building the energy backbone for artificial intelligence using the very materials we've already mined, manufactured, and driven across millions of miles. In doing so, Redwood isn't just recycling batteries. It's recharging the future.
