AI's power crunch could get a boost from old EV batteries

America’s fast-growing fleet of electric vehicles could become an unexpected source of electricity storage as the country races to meet surging power demand from AI.

That’s according to Redwood Materials, a startup founded by former Tesla CTO JB Straubel, which now recycles more than 70% of all the batteries in North America.

With millions of EV batteries coming to the end of their lives over the next decade and beyond, Redwood has adapted its business to repurpose many of these batteries to store electricity for the power grid, factories, and AI data centers rather than being immediately recycled.

The proposal comes as electricity demand is rising after years of relatively flat growth.

AI data centers, factories coming back to America, and a broader shift toward electrification are putting increasing pressure on the US grid.

Redwood cited projections that AI data centers alone could consume 12% of US electricity by 2028.

Meeting that demand has proved difficult because building new transmission lines and other grid infrastructure takes many years.

Large battery storage systems can help balance electricity supply and demand while utilities wait for new infrastructure to come online.

Redwood argues that one overlooked 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 of their battery packs will no longer provide enough driving range for cars, but could still have years of useful life storing electricity.

Redwood estimates roughly 1 terawatt-hour, or 1,000 gigawatt-hours, of used EV battery capacity will become available in the US by 2040.

Beginning in the early 2030s, those second-life batteries could supply about half of the country’s energy storage demand during that period, the company estimates.

And it’s aiming to provide about 400 gigawatt-hours of this supply.

The company said it is developing technology that allows battery packs from more than 100 different electric vehicle models to be combined into standardized energy storage systems.

Batteries that cannot be safely reused would instead be recycled to recover valuable materials such as lithium, copper, and rare earth minerals.

Redwood said the approach could create lower-cost energy storage while keeping battery materials inside US supply chains.

If successful, the strategy would turn aging EV batteries from a recycling challenge into an energy asset at a time when reliable electricity is becoming one of the biggest constraints on America’s AI ambitions.

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