Redwood Materials lays off 10% in restructuring to chase energy storage business

Redwood Materials has laid off about 135 employees, or roughly 10% of its workforce, as part of its restructuring to better accommodate its growing energy storage business, TechCrunch has learned.

The cuts come just five months after Redwood Reducing 5% of its workforcethree months after closing a $425 million funding round, boosting the battery recycling company’s valuation to as much as $6 billion, as TechCrunch reported. I mentioned previously.

It’s been a tough time in the battery industry lately. Earlier this month, battery recycling company Ascend Elements introduced it Chapter 11 bankruptcy protectionPointing to the “insurmountable” financial challenges. Some battery manufacturers have also restructured or gone out of business, as the U.S. auto industry backs away from its more optimistic and ambitious plans to transition to electric vehicles.

But Redwood Materials founder and CEO J.B. Straubel told employees that this new round of cuts is not a sign that the company is headed down the same path.

“Today’s redwoods are the strongest they have ever been,” Straubel wrote in an email to workers who were not laid off, according to a copy seen by TechCrunch. “The materials business is on its way to profitability and has an exciting roadmap ahead of it.”

Straubel noted that Redwood “continues to dominate the battery recycling market in the United States” but also praised the company’s “significant momentum” in its new venture. Energy storage business. Redwood recently announced deals with Crusoe AI and more recently with electric car maker Rivian to provide recycled batteries that can be used to power those companies’ facilities. The company declined to comment beyond the content of Straubel’s email.

In his letter, Straubel wrote that “parts of the company expanded too quickly to support the direction” of Redwood. As a result, Redwood is making cuts in multiple departments, including engineering and operations organizations, according to an employee who was granted anonymity to discuss the layoffs.

“We are confident in our ability to deliver on our important projects with a smaller, more focused team,” he wrote. “We have successfully adapted to changes in the market that have bankrupted many of our competitors.”

Straubel went on to write that he is “more excited than ever about our path forward as we build the most integrated and cost-effective biomaterials and energy storage business in the world.”

“This is a self-sustaining company that will continue to make this company more valuable over time. We have the team and technology to do what no other company can do,” he wrote.

Redwood’s chief human resources officer told the laid-off workers that the layoffs were made “to increase our focus, our work, and the size of our teams to support the direction Redwood is headed in the future,” according to a copy of her email, which was seen by TechCrunch.

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

“I am grateful to the approximately 135 employees to whom we say goodbye today — they have all contributed to building Redwood,” he wrote.