Redwood Materials, the battery recycling startup founded by former Tesla chief technology officer JB Straubel, is betting that second-life EV batteries can help close the widening gap between surging AI electricity demand and the grid infrastructure needed to meet it.
The company, which recycles more than 70% of all batteries in North America, has adapted its business to repurpose ageing electric vehicle battery packs for stationary storage rather than sending them straight to recycling. Its target markets include the power grid, factories, and AI data centres.
Second-Life EV Batteries and the Grid Storage Gap
The timing reflects a structural shift in US electricity demand. Data centres consumed roughly 4.4% of total US electricity in 2023, equivalent to 176 TWh, according to a 2024 report by Lawrence Berkeley National Laboratory published by the US Department of Energy. That figure is projected to rise to between 325 and 580 TWh by 2028, a range of 6.7% to 12% of total US electricity use. Redwood has cited the upper end of that range in its own projections.
Building new transmission lines and grid infrastructure to keep pace takes many years. Large battery storage systems can balance supply and demand in the interim, and Redwood argues that one underused source of those batteries is already sitting in American driveways.
More than 6 million electric vehicles have been sold in the US over the past decade. As those vehicles age, many battery packs will no longer deliver enough driving range, but could retain years of useful storage life. Redwood estimates roughly 1 terawatt-hour of used EV battery capacity will become available in the US by 2040. Beginning in the early 2030s, second-life batteries could supply around half of the country’s energy storage demand during that period, the company estimates. Redwood is aiming to provide approximately 400 gigawatt-hours of that supply.
To make that work at scale, the company said it is developing technology that allows battery packs from more than 100 different EV models to be combined into standardised energy storage systems. Batteries that cannot be safely reused would be recycled to recover lithium, copper, and rare earth minerals.
From Car Parks to Data Centres: Early Deployments
Redwood has already moved beyond the drawing board. Working with AI infrastructure company Crusoe, it deployed 63 MWh of second-life battery storage at an AI data centre, described by ESS News as the second-largest such deployment in North America and the largest battery-powered microgrid of its kind, as of June 2025.
On the automotive side, Redwood and General Motors announced a partnership on 9 June 2026 covering the full battery lifecycle, with GM’s second-life EV batteries and new batteries both earmarked for Redwood’s energy storage systems. GM became the first automaker to commit to Redwood across that entire arc, from initial manufacture through end-of-vehicle-life reuse.
A separate agreement with Rivian, announced via the Redwood Materials newsroom, will deploy 10 MWh of dispatchable storage at Rivian’s manufacturing facility in Normal, Illinois, using more than 100 second-life Rivian battery packs. The aim is to cut energy costs and reduce grid load during peak demand periods at the plant itself.
A partnership with BMW, announced in September 2024, adds another dimension: Redwood plans to recycle second-life batteries from BMW’s network of nearly 700 US locations, including dealerships and distribution centres. According to Manufacturing Dive, Redwood aims to recover between 95% and 98% of critical minerals, including nickel, cobalt, lithium, and copper, and return them to the domestic battery supply chain.
The company closed a $425 million Series E funding round, with the final close announced on 28 January 2026, to scale the energy storage business underpinning these partnerships.
If the 400 GWh target is reached by the early 2030s, Redwood’s approach would reframe the looming wave of ageing EV batteries not as a disposal problem but as a ready-made buffer for the electricity constraints that are increasingly shaping the pace of AI expansion.