Redwood Materials cuts 10% of workforce in restructuring to pursue energy storage business

Redwood Materials has laid off about 135 employees, or about 10% of its workforce, as it reorganizes to better accommodate its growing energy storage business, according to a TechCrunch investigation.

As TechCrunch previously reported, the layoffs come just five months after Redwood cut 5% of its workforce and three months after closing a $425 million funding round that valued the battery recycling company at more than $6 billion.

The battery industry has been going through difficult times lately. Earlier this month, battery recycler Ascend Elements filed for Chapter 11 bankruptcy, citing “insurmountable” financial challenges. As the U.S. auto industry retreats from its most optimistic and ambitious plans to transition to electric vehicles, some battery manufacturers have also restructured or gone out of business.

However, Redwood Materials founder and CEO JB Straubel told employees that the new layoffs are not a sign that the company will continue down the same path.

“Today’s redwoods are the strongest they’ve ever been,” Straubel wrote in an email to workers who weren’t laid off, according to a copy seen by TechCrunch. “Our materials business is well on its way to profitability and we have an exciting roadmap ahead.”

Strobel said Redwood will “keep going.”[s] Redwood recently announced agreements with Crusoe AI and, more recently, electric vehicle manufacturer Rivian to provide recycled batteries that can be used to power these companies’ facilities. The company declined to comment beyond the content of Straubel’s email.

In his message, Strobel said Redwood’s “parts of the company have expanded beyond what is necessary to support its direction.” As a result, Redwood is cutting jobs across multiple divisions, including its engineering and operations organizations, said the employee, who was granted anonymity to discuss the layoffs.

“We believe we can deliver important projects with smaller, more focused teams,” he wrote. “We have successfully adapted to changes in the market that have driven many of our competitors into bankruptcy.”

Strobel went on to write, “I am more excited than ever about our future development as we build the world’s most integrated, cost-effective critical materials and energy storage business.”

“This is a self-sustaining business that will continue to increase the value of this company over time. We have the team and technology to do things that other companies cannot do,” he wrote.

The fired employees were told by Redwood’s chief human resources officer that the layoffs were made to “strengthen our focus, work and team size to support Redwood’s future direction,” according to a copy of her email viewed by TechCrunch.

In addition to severance packages and paid health insurance, the laid-off employees also received “career transition assistance,” according to Straubel’s email.

“We would like to thank the approximately 135 employees we are saying goodbye to today. They all contributed to building Redwood,” he wrote.