Redwood Materials Lays Off 10% Workforce 3 Months After $425 Million Series E Raise

Redwood Materials is trimming roughly 10% of its workforce even after closing a fresh $425 million funding round just three months ago, signaling a sharper pivot toward energy storage as cracks continue to show across the broader battery industry.

The layoffs impact around 135 employees and come just five months after the company previously reduced its workforce by 5%. The latest restructuring arrives at a time when battery companies are facing mounting pressure, from slowing EV momentum in the U.S. to growing financial strain across the sector.
 

TL;DR

 

• Redwood laid off nearly 135 employees, or 10% of its workforce
• This follows another 5% workforce reduction just five months earlier
• The company raised $425 million in Series E funding in January 2026
• Google joined the round as a new investor alongside Capricorn and Goldman Sachs Alternatives
• Redwood says the layoffs are meant to streamline operations and accelerate its fast-growing energy storage business

 

Redwood Says The Layoffs Are About Focus, Not Financial Trouble

The timing of the layoffs raised eyebrows, especially since Redwood recently announced the final close of its  $425 million Series E round that came about due to strong investor demand, a significant increase from the previous $350 million it got.

The funding round brought in continued backing from Capricorn and Goldman Sachs Alternatives, while Google joined as a new investor. Redwood said the capital would help scale its energy storage platform while strengthening its recycling and critical minerals operations.

The raise also rose the company's valuation above $6 billion.

Still, CEO JB Straubel pushed back against any comparisons to struggling battery companies.

In an internal email sent to remaining employees, Straubel said Redwood remains in a strong position despite the cuts. 

“Redwood today is the strongest it’s ever been,” he wrote.

He added that the company’s materials business is moving toward profitability and said Redwood continues to dominate the U.S. battery recycling market.

According to Straubel, some parts of the company expanded faster than necessary, prompting cuts across multiple teams, including engineering and operations.

“We are confident that we can deliver on our critical projects with a smaller team that is more focused,” he said.

 

Redwood’s Energy Storage Push Comes As EV Demand Slows

Redwood’s restructuring reflects a broader shift happening across the battery market.

While EV adoption remains a long-term growth trend, several automakers in the U.S. have recently scaled back aggressive electrification targets, creating ripple effects across battery manufacturers and recyclers.

Earlier this month, battery recycler Ascend Elements filed for Chapter 11 bankruptcy protection, citing what it called “insurmountable” financial challenges.

Redwood appears to be moving in a different direction by expanding into energy storage infrastructure, which is becoming increasingly critical as electricity demand rises from AI data centers, manufacturing expansion, and broader electrification efforts.

The company recently signed deals with Crusoe AI and electric vehicle maker Rivian to supply recycled batteries for powering facilities.
   

Why Redwood Believes This Bet Will Pay Off

Redwood believes energy storage could become its next major growth engine.

The company said surging electricity demand has made energy storage “essential infrastructure,” particularly as AI workloads push data center energy consumption higher.

Straubel reinforced that confidence in his message to employees.

“This is a self-sustaining business and will continue to make this company more valuable over time. We have the team and the technology to do what no other company can.”

Employees affected by the layoffs will receive severance packages, paid healthcare benefits, and career transition support.

For Redwood, the message is clear: cut now, stay lean, and bet bigger on where it believes the future demand is heading.