Redwood Materials, a company founded by Tesla's former chief technologist JB Straubel, has launched a new business line called Redwood Energy. This initiative aims to repurpose used electric vehicle (EV) batteries into large-scale, cost-effective, and sustainable energy storage systems, primarily to meet the escalating power demands of artificial intelligence (AI) data centers. The strategic move comes as data centers, particularly those driven by generative AI, are rapidly expanding around Redwood's Nevada campus, creating a significant new demand for power that the existing grid struggles to support.

Redwood Materials has already established itself in the battery recycling space, extracting valuable metals and minerals from end-of-life batteries to reintroduce them into the EV supply chain. The company processes over 20 GWh of used lithium-ion batteries annually, equivalent to approximately 250,000 EVs, accounting for about 90% of all lithium-ion batteries recycled in North America. A key insight is that most of these used battery packs retain between 50% to 80% of their original capacity. While no longer optimal for powering vehicles, this residual capacity makes them highly viable for stationary energy storage applications, offering a valuable 'second life' before eventual recycling.

Redwood Energy's innovative approach transforms these lightly used EV batteries into robust energy storage systems designed for data centers, industrial clients, and grid support. Its inaugural deployment is already operational: a battery system boasting 12 MW of power and 63 MWh of storage capacity, currently powering a 2,000-GPU data center for Crusoe, an AI infrastructure firm. Redwood asserts that this is the largest second-life battery deployment globally and North America's largest off-grid data center. This system, located at Redwood's Nevada campus, represents a significant step towards sustainable energy infrastructure.

The benefits of Redwood Energy's solution are multifaceted. By utilizing repurposed batteries, the system sidesteps the reliance on fossil fuels, significantly reduces carbon emissions, and circumvents the lengthy permitting delays often associated with traditional energy infrastructure projects. Furthermore, Redwood's vertically integrated process—from battery collection and diagnostics to integration and eventual recycling—enables these repurposed systems to be deployed at a substantially lower cost compared to brand new lithium-ion installations. The company's established logistics and diagnostic system recovers over 70% of battery packs across North America, using in-house software to evaluate each battery's suitability for reuse before integration into modular storage systems, regardless of the original manufacturer. Once these second-life systems reach their ultimate end-of-life, the batteries are funneled back into Redwood's recycling operation to recover materials for new battery production, completing a full-circle energy platform.

The market potential for Redwood Energy is immense. Projections indicate that more than 100,000 EVs will reach end-of-life in the US alone this year. The current 5 million EVs on US roads represent an estimated 350 GWh of latent energy storage capacity, a figure that expands by an additional 150 GWh annually. Redwood Energy aims to deploy 20 GWh of second-life battery storage by 2028. This repurposed energy can power various applications, including AI supercomputers, grid stabilization, and renewable energy storage for urban areas. Investors, like Baillie Gifford's Chris Evdaimon, praise Redwood's