Redwood Materials lays down 10% in restructuring to divest energy storage business

Redwood Materials has laid off about 135 workers, or about 10% of its workforce, as it restructures to better handle its growing energy storage business, TechCrunch has learned.

The cuts come five months after Redwood cut 5% of its workforce, and three months after it closed a $425 million financing that boosted the battery recycling company’s valuation to north of $6 billion, as TechCrunch previously reported.

It’s been a tough time for the battery industry lately. Earlier this month, battery recovery company Ascend Elements filed for Chapter 11 bankruptcy protection, citing “insurmountable” financial challenges. Some battery makers have also restructured or gone out of business as the US auto industry backed away from its ambitious plans and ambitions to switch to electric vehicles.

But Redwood Materials founder and CEO JB Straubel told employees that this latest round of layoffs is not a sign that the company is moving in the same direction.

“Redwood today is the strongest it’s ever been,” Straubel said in an email to employees who weren’t fired, according to a copy viewed by TechCrunch. “The building materials business is on the road to profitability and has an exciting roadmap.”

Straubel noted that Redwood “continues[s] to dominate the US battery recycling market” but also highlighted the company’s “push” in its new energy storage business. Redwood recently announced deals with Crusoe AI and, more recently, electric car maker Rivian to supply recycled batteries that can be used to power those corporate facilities. The company declined to comment beyond the content of Straubel’s email.

In his message, Straubel wrote that “parts of the company have grown faster than necessary to support the direction” of Redwood. As a result, Redwood said it is cutting multiple divisions, including engineering and operations organizations, according to an employee who spoke on condition of anonymity to discuss the layoffs.

“We are confident that we can accomplish our important projects with a small, highly focused team,” he wrote. “We have successfully adapted to changes in the market that have included many people who compete with us for money.

Straubel went on to write that he’s “more excited than ever about the direction we’re going as we build an integrated and cost-effective infrastructure and energy storage business for the world.”

“This is an independent 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 do,” he wrote.

The laid-off employees were told by a Redwood HR executive that the layoffs were to “sharpen our focus, our work and the size of our teams to support Redwood’s future direction,” according to a copy of his email, which was viewed by TechCrunch.

The laid-off workers received severance and paid health benefits, according to Straubel’s email, as well as “career transition assistance.”

“I am very grateful to the approximately 135 employees we are saying goodbye to today – all of them contributed to building Redwood,” he wrote.