Google Invests in Battery Startup as AI Fuels Electricity Demand Surge
With the rapid expansion of artificial intelligence and data centers leading to a significant increase in electricity consumption, major technology companies are actively seeking solutions to secure reliable power sources. Google, alongside industry giants such as Amazon and Microsoft, is making strategic investments to ensure access to more electricity for their energy-intensive operations.
Google Backs Tesla Co-Founder's Energy Storage Venture
In a notable move to address this growing demand, Google has become an investor in Redwood Materials Inc, a battery recycling and energy storage startup founded by Tesla co-founder JB Straubel. According to a Bloomberg report, Alphabet Inc's Google participated in an expanded funding round that values Redwood at more than $6 billion. A Google spokesperson confirmed the company's involvement in this investment round, though specific details were not disclosed.
This investment follows Google's recent acquisition of clean energy developer Intersect Power LLC for $4.75 billion in cash plus existing debt, highlighting the tech giant's commitment to bolstering its energy infrastructure. The funding round maintains Redwood's valuation above $6 billion, as reported by sources familiar with the private matter.
Redwood Materials Expands Funding with Tech and AI Support
Redwood Materials successfully raised a total of $425 million in its Series E financing, an increase from the $350 million secured when the round was initially announced in October. The funding was led by venture capital firm Eclipse and NVentures, the venture arm of Nvidia Corp, indicating strong backing from the technology and artificial intelligence sectors.
In an official statement, Redwood emphasized the critical role of energy storage in today's landscape: "As electricity demand surges—driven by AI, data centers, manufacturing, and electrification—energy storage is no longer optional; it is essential infrastructure." The company plans to use the recent financing to accelerate storage deployments and support its critical minerals and recycling businesses.
Strategic Shift Amid Evolving Market Conditions
Founded by JB Straubel in 2017, Redwood Materials initially focused on domesticating key components of the electric vehicle battery supply chain by recycling expired battery packs from aging EVs and consumer electronics. However, with US electric vehicle sales falling short of expectations and changes in government incentives under the Trump administration, the company has pivoted to address the rising demand for clean, reliable energy to power data centers that support artificial intelligence.
This strategic shift was accompanied by organizational changes, including job cuts in November 2025 that affected approximately 5% to 6% of Redwood's workforce. These reductions reflect the company's intensified focus on capturing opportunities in the grid-scale energy storage battery market, aligning with the broader industry trends driven by AI expansion.
The collaboration between Google and Redwood Materials underscores a growing trend where technology firms are investing in energy storage and recycling solutions to mitigate the power challenges posed by artificial intelligence and data center growth. As AI continues to evolve, such partnerships are likely to become increasingly vital for sustaining technological advancement while promoting environmental sustainability.
