Auto Giant Meets AI Demand: The Energy Challenge

As the artificial intelligence (AI) boom accelerates globally, its appetite for energy has reached unprecedented levels. Data centers powering generative AI and machine learning now demand more reliable, scalable, and sustainable sources of electricity than ever before. In a move that blurs traditional industry boundaries, General Motors (GM)—a century-old automotive titan—has entered the spotlight as a surprising and strategic player in the AI infrastructure ecosystem.

On July 16, 2025, GM announced a landmark partnership with Redwood Materials, a Nevada-based battery recycling and technology company founded by former Tesla CTO JB Straubel. This collaboration is focused on repurposing GM’s electric vehicle (EV) batteries, both new and end-of-life packs, as grid-scale energy storage to back up data centers that run AI workloads. The implications could be transformative for both the energy and tech sectors.

From Cars to Power Grids: How GM’s Batteries are Fueling AI

For decades, automakers have sought to extend the useful life of advanced vehicle components. Now, with the slick rise in electric vehicles, automakers possess tens of thousands of batteries with significant remaining capacity when their days on the road are done. Instead of sending these valuable assets to waste, GM is giving its batteries a critical second life.

Redwood Materials, recently expanding into energy storage under its new arm, Redwood Energy, has already deployed GM EV batteries in Nevada. These batteries now help power the world’s largest second-life battery microgrid, enabling the operations of Crusoe, a startup building AI-focused data centers. This microgrid, based in the heart of the Nevada desert, represents a prototype for grid-scale energy solutions that can sustain the colossal, always-on demands of AI computation—which, according to the International Energy Agency, could triple global data center energy use by 2030.

Soaring Electricity Demand and the Rise of Battery Storage

The AI sector’s explosive growth has triggered surging demand for power. According to recent industry estimates, AI data centers could soon account for up to 8% of total U.S. electricity consumption, up from less than 2% just a few years ago. Traditional power grids, already strained in many regions, risk buckling under this new load.

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

By leveraging batteries manufactured domestically—both fresh-off-the-line and retired from vehicles—GM and Redwood Materials are insulating the U.S. tech economy from volatile international supply chains impacted by geopolitical tensions, such as the ongoing trade disputes with China and critical minerals tariffs.

Sustainability and Strategic Industry Collaboration

The collaboration highlights a broader industrial trend: the circular economy. Rather than treating end-of-life batteries as waste, companies like GM and Redwood now see them as valuable infrastructure for the digital era. This approach not only helps recycle expensive and rare minerals but also dramatically decreases battery disposal’s environmental footprint and reduces the need for new mining.

JB Straubel, Redwood’s CEO, emphasized that both GM’s second-life and new EV batteries will be incorporated into future energy storage installations. “Both GM’s second-life EV batteries and new batteries can be deployed in Redwood’s energy storage systems, delivering fast, flexible power solutions and strengthening America’s energy and manufacturing independence,” Straubel stated. As AI continues its relentless expansion, industry experts see second-life battery deployment as critical for meeting climate goals while supporting next-gen computing.

The Road Ahead: What’s Next for GM and AI Infrastructure

GM’s transformation into a power sector stakeholder looks set to create ripple effects across industries. With North America’s data center market projected by Business Research Insights to surpass $120 billion by 2032, energy storage will be one of the defining bottlenecks—and opportunities—of the coming decade. Already, tech giants like Microsoft and Google are investing heavily in renewables and energy storage to decarbonize their AI operations.

Looking ahead, GM and Redwood Materials are expected to announce more details about their expanding partnerships and new pilot projects later in 2025. As the auto industry morphs to meet not only transportation but also digital infrastructure needs, GM’s journey illustrates how innovation in one field can light the path for another—and how the future of AI might just run on yesterday’s car batteries.