Redwood Materials raises $425M to power AI data centres
US-based battery recycling specialist Redwood Materials has secured approximately $425 million in new financing, positioning the company as a key player in supplying sustainable energy infrastructure for the rapidly expanding world of AI data centres.
Founded by former Tesla CTO JB Straubel, Redwood Materials focuses on recovering valuable materials such as lithium, nickel and cobalt from used batteries and production scrap. The company then processes these into high-quality components for new batteries, creating a closed-loop supply chain that supports the growth of large-scale energy storage and electrification projects.
AI demand drives energy and materials race
The surge in artificial intelligence workloads has triggered a wave of investment in new data centres, which are notoriously energy-intensive. Operators are increasingly turning to grid-scale batteries and on-site renewable energy to stabilise power supply, reduce emissions and manage peak demand.
By expanding its capacity to recycle and refine battery materials domestically, Redwood Materials aims to become a strategic supplier for these next-generation facilities. The fresh capital is expected to support new plants, advanced recycling technology and long-term supply agreements with utilities, battery manufacturers and hyperscale cloud providers.
Strengthening the US clean-tech supply chain
The funding round underscores investor confidence in the intersection of clean energy and AI infrastructure. As governments and corporations seek to cut the carbon footprint of digital services, secure access to critical minerals and reduce dependence on overseas suppliers, vertically integrated recyclers like Redwood Materials are gaining strategic importance.
Industry analysts note that the company’s model not only reduces waste and environmental impact, but also helps stabilise the cost and availability of key inputs for lithium-ion batteries. With AI adoption accelerating across sectors, demand for reliable, low-carbon power solutions for data centres is expected to rise sharply, giving Redwood Materials a significant growth runway.