US “closed‑loop” materials company pivots from scrap batteries to energy‑storage for AI — a sign of shifting tech value chains and sustainability focus

The U.S. battery‑recycling and materials company Redwood Materials, Inc. announced the successful closing of a US$350 million Series E funding round, underscoring both the shifting economics of battery production and the rising interplay between sustainability and technology valuations.

Led by venture capital firm Eclipse Ventures, this round also saw strategic participation from NVentures, the investment arm of Nvidia Corporation. The investment reportedly lifts Redwood’s valuation to around US$6 billion — a meaningful leap from its previous mark of approximately US$5 billion.

A pivot from recycling to energy‑storage
Founded in 2017 by former Tesla CTO JB Straubel, Redwood Materials originally focused on the recycling of end‑of‑life lithium‑ion battery packs from electric vehicles, consumer electronics and manufacturing scrap, reclaiming critical metals such as lithium, cobalt, nickel and copper.

In recent years, Redwood expanded its remit: it now not only recovers “black‑mass” feedstocks for battery materials production, but also redeploys used EV battery cells into large‑scale energy‑storage systems. These systems target grid‑services and energy‑intensive applications such as AI data‑centres.

The infusion of fresh capital is earmarked to accelerate several strategic axes:

• Scaling up the energy‑storage business (“Redwood Energy”), including deployments of used EV batteries in stationary storage.
• Boosting refining and materials‑production capacity for recycled metals and battery precursors.
• Hiring additional engineering and operations staff to support the expanded operations.

Why the timing matters
At a macro level, Redwood’s raise comes at a moment when the tech‑supply chain and sustainability vectors are converging. Demand for batteries is surging — driven by electric vehicles, grid stability and AI infrastructure. Meanwhile, the supply of critical raw materials is under pressure, with geopolitical supply‑chain risks and environmental burdens increasingly under scrutiny.

The association with Nvidia in the funding round signals how battery‑materials and energy‑storage firms are increasingly viewed not just as “cleantech” plays, but as integral nodes in the tech‑hardware ecosystem. Redwood’s move to supply energy‑storage to AI data‑centres is emblematic of this shift.

Moreover, with governments and companies under pressure to decarbonize and localize supply chains, firms that can offer “circular economy” models for battery materials are gaining strategic importance. Redwood claims it recovers more than 70 % of used battery packs in North America and is targeting 20 GWh of grid‑scale storage deployment by 2028.

A tech‑valuation challenge
The rise of this battery‑recycling firm also underscores how valuations in adjacent tech sectors are evolving. Historically, battery recycling and materials refinement were niche industrial‑process plays with relatively modest valuations. Today, the intersection of energy‑storage, critical‑materials supply chains and AI infrastructure is blurring boundaries: “industrial” firms are attracting “tech‑style” valuations.

Yet the challenge remains: scaling up refining and processing operations involves heavy capital investment, complex environmental permitting and long time‑horizons for returns. Redwood’s ability to deliver both recycling volume and high‑margin energy‑storage deployments will be closely watched — and its valuation implies strong investor conviction in that dual ambition.

Implications for the broader market
For automakers and battery‑cell manufacturers, Redwood’s progress signals a maturing downstream supply‑chain alternative: instead of purely relying on virgin mining and overseas processing, recycled‑material pathways and domestic circular‑economy models are increasingly viable. This could ease pressure on input‑costs, reduce exposure to supply‑chain bottlenecks and improve ESG credentials.

For the energy‑storage sector, the reuse of EV‑battery packs (before material extraction) introduces a second‑life business model: extending the life of high‑value battery assets in stationary applications before final recycling. That dual lifecycle improves economics and resource‑efficiency. Redwood explicitly targets that model.

For investors, the transaction suggests that “sustainability‑plus‑technology” is becoming a choice rather than a niche. The fact that a recycling‑and‑materials play attracted strategic investment from Nvidia attests to the convergence of clean‑energy, hardware, and data‑infrastructure capital flows.

Risks and next steps
Despite the strong tailwinds, the company still faces several hurdles:

• Execution risk: scaling refining operations, materials‑production and storage deployments at commercial scale.
• Commodity‑price risk: recycled‑material margins depend in part on the volatility of underlying metal markets (lithium, cobalt, nickel).
• Regulatory & environmental risk: permitting, waste‑handling, chemical processing all involve regulatory complexity.
• Competition & supply‑chain risk: Other firms and international players are targeting battery materials, and securing feed‑stocks (used batteries) is increasingly competitive.

Redwood must now deliver on its growth promises, including its target of large‑scale energy‑storage deployments (20 GWh by 2028) and the ramp‑up of refining capacity. Observers will watch for announcements of new facilities, partnerships with automakers or AI‑data‑centre customers, and progress toward circular‑material production targets.

Conclusion
The $350 million raise by Redwood Materials is more than just a financing milestone — it’s a clear signal that battery‑materials and recycling firms are stepping into the spotlight of tech valuations and sustainability imperatives. The company’s evolution from recovering metals to powering AI‑scale infrastructure illustrates a broader shift in how value is created within the battery ecosystem.

As the world pivots toward electrification, digital‑infrastructure growth and domestic supply‑chain resilience, firms like Redwood may become linchpins in the next industrial age — provided they deliver on their ambitious roadmap. For now, investors and industry participants alike will be watching closely to see if the vision incarnates into momentum.