Redwood Materials, the battery materials recycling startup that counts former Tesla CTO JB Straubel as a co-founder, has cut about 5% of its staff just weeks after closing a $350 million funding round, Bloomberg reported.
With about 1,200 workers, the announcement applies to roughly 60 roles and reflects how capital-intensive clean energy manufacturing is being handled amidst changing market dynamics.
The decision underscores a paradox of the moment in electrification: Companies are awash in new capital to construct domestic supply chains even as they are demanding stricter operating discipline as they shift out of pilot-scale operations and into full commercial output.
Reasons to Trim Headcount After Fresh Funding Round
Laying off people after raising growth capital may seem counterintuitive but has become more frequent at heavy-industry startups. Large infusions are more often ring-fenced for equipment, process fine-tuning and working capital needed for factory ramp-ups, rather than headcount growth. Adjusting teams as facilities move from construction to commissioning can support burn rates that are in line with production milestones and customer deliveries.
On top of that, market dynamics are at play. Benchmark Mineral Intelligence and other analysts have tracked extreme swings in battery metals prices since their 2022 highs, with volatility for lithium and nickel squeezing margins across the recycling and materials ecosystem. Meanwhile, growth in EV sales in North America has slowed from previously headlong estimates, leading some supply chain players to reset delivery schedules without sacrificing long-term capacity targets.
Redwood straddles various profit pools — recycling, materials refining and cathode production — so near-term cost control is an important lever before bigger plants are in service. Wise restructuring at this stage can have the dividend of stretching runway until high volume contracts start filtering through to the common stock holding income statement.
From Recycling to Cathodes and Energy Storage
Founded in 2017, the Nevada company made a name for itself by recovering valuable metals like cobalt, nickel and lithium from end-of-life electronics and EV batteries to put them back into battery supply chains. Clients have included Panasonic, and Redwood has moved from anode to cathode active material production — a critical step for advancing to a closed-loop battery system in the United States.
Aside from materials, the company has also started to reuse EV batteries as stationary energy storage products. This second-life approach taps a fast-growing market: It’s projected that by 2030 grid-scale storage will be installed to balance renewables and supplement the round-the-clock power needs of AI data centers. Redwood has already stored over 1 gigawatt-hour of battery material for those applications, according to earlier company disclosures, showing the extent that second-life and recycling can be symbiotic.
The buildout is across more than one site. Redwood has already publicly disclosed massive plants in Nevada and a campus planned for South Carolina, intending to provide tens-of-gigawatt-hour scale battery-grade materials over time. The company also secured a conditional commitment for approximately $2 billion of guaranteed senior secured loans from the U.S. Department of Energy’s Loan Programs Office to support the construction and operation of its manufacturing facility, a clear indication of robust federal backing for onshoring supply chains.
Battery Circularity Sector in Recalibration
Battery circularity outfits have had a rocky ride. Li-Cycle put a flagship hub project on hold and restructured; other materials startups tweaked hiring and capex plans as they chased scale. And yet, beneath the commotion, key demand signals look constructive: Average lithium-ion battery pack prices plunged relative to their peak, according to BloombergNEF; while the near-term rate can bounce around, that’s a big deal for long-run EV and storage adoption. At the same time, the domestic-content incentives of the Inflation Reduction Act helped bring manufacturing back home.
For Redwood, the cuts seem more like operational housekeeping than a strategic U-turn. The company’s multi-pronged approach — recycling feedstock, refining into battery-grade input and producing cathode material for cellmakers — is aimed at the most valuable segments of the supply chain. With large offtake agreements, your unit economics really benefit at scale when production outputs and recovery rates go up.
What to Watch Next for Redwood Materials and Sector
What to watch:
- Cathode output ramp and delivery versus customer commitments
- Progress on second-life storage deployments tied to utility or data center loads
- Ramp of capital spending at U.S. facilities
- Any new offtake agreements or sizing adjustments to capacity targets that specify revenue timing
For a company that has to scale up multiple factories and product portfolios, a 5% cut is modest. If Redwood can bring its plan to domesticate key materials and close the loop on EV batteries to fruition, the headcount reduction in the near term could enable it to eat more share when demand reaccelerates.