What’s driving a new energy storage partnership between GM and Redwood

The electric vehicle market is on shaky ground amid cooling demand and the looming expiration of federal incentives.

Flexibility could be the name of the game for EV sector players in the coming months and years—and a new deal between General Motors and battery recycler Redwood Materials may point to a promising opportunity: energy storage.

In a July 16 news release, the two companies announced a non-binding memorandum of understanding “to accelerate deployment of energy storage systems using both new US-manufactured batteries from GM and second-life battery packs from GM electric vehicles.”

GM touted the deal as “a significant step toward taking GM’s advanced battery technology beyond EVs.” The automaker already had been sending used EV battery materials to Redwood under an existing agreement.

GM has its own burgeoning energy business, which in October launched a stationary energy storage unit for EVs dubbed “PowerBank.” The product allows users to transfer and store energy from the grid. Other automakers, like Tesla, also offer energy storage products.

Data center demand: Driving the agreement, according to GM and Redwood executives, is the surging demand for electricity, in part from a proliferation of new data centers.

“The market for grid-scale batteries and backup power isn’t just expanding, it’s becoming essential infrastructure,” Kurt Kelty, GM’s VP of batteries, propulsion, and sustainability, said in a statement. “Electricity demand is climbing, and it’s only going to accelerate. To meet that challenge, the US needs energy storage solutions that can be deployed quickly, economically, and made right here at home.”

JB Straubel, founder and CEO of Redwood and Tesla’s co-founder and former chief technology officer, in a statement noted that “electricity demand is accelerating at an unprecedented pace, driven by AI and the rapid electrification of everything from transportation to industry.”

Redwood, founded in 2017, has established a business around recovering end-of-life batteries and recycling their raw materials. The company reports receiving over 20 gigawatt hours of batteries per year, or the equivalent of about 250,000 EVs, “representing about 90% of all lithium-ion batteries and battery materials recycled in North America.” Redwood’s battery recycling customers include Lyft, Amazon, Nissan, Toyota, Ford, and Tesla and Panasonic’s battery manufacturing partnership, The Verge reported.

In June, Redwood launched a new energy storage business dubbed Redwood Energy that it said would help “meet surging power demand from AI data centers and other applications.” Company leaders identified opportunities to put leftover usable capacity from used EV batteries back to work before recycling the batteries.

Redwood has established what it describes as “the largest second-life battery deployment in the world and the largest microgrid in North America,” which powers a data center for AI infrastructure company Crusoe.

In a story about Redwood’s new energy storage business, Canary Media noted that the company’s location east of Reno could be opportune given its relative proximity to data centers for the likes of Google, Apple, and Microsoft.

“Traditional grid expansion can’t keep up,” Redwood said in a release on its new line of business. “Renewables are intermittent. And imported, new energy storage is still too expensive to address the entire problem.”

The answer, according to the startup: “Repurposing used battery packs…into modular energy storage systems that bridge today’s infrastructure gaps with speed and scale.”