The Electric: Repurposed EV Batteries Are a New Power Source in AI Data Centers

EV batteries are turning out to have useful lives even after they stop powering vehicles. The battery industry, along with academics who study battery life, say the batteries turn out to still have a lot of juice when they seem dead. Rather than ripping them apart and recycling their metals, they say, EV batteries should be repurposed for other uses—like powering energy-starved AI data centers and electricity grids. 

On Tuesday, EV maker Rivian said it would repurpose around 100 of its battery packs to help power a manufacturing plant it is building in Normal, Ill. The amount of energy in the deal isn’t a lot—it’s equivalent to around 1,000 home batteries such as those sold by Tesla. But Rivian suggested it would add more capacity in the future.

Rivian said it would ship the packs to battery refurbisher Redwood Materials, which would repurpose the batteries and integrate them into big power systems. Redwood began as a battery recycling company, shredding batteries to sell the metals, and pivoted to refurbishing them. A Rivian spokesperson told me the batteries come from its test and fleet vehicles.

It’s the latest such deal for Redwood, which Tesla co-founder JB Straubel launched in 2017. Last June, Redwood linked around 1,000 used EV batteries together to provide primary power to a Crusoe AI data center housed at Redwood’s facility in Sparks, Nev.

Redwood’s pivot reflects a shift in a longstanding question about batteries—what to do with them once the EVs in which they are installed have driven 100,000 or 150,000 miles. In the U.S., Europe and China, the answer has long been to recycle them.

But a new paper released this week by academic journal Applied Energy argues that companies should instead first test whether the batteries have sufficient energy remaining so they can serve another use rather than get scrapped.

This change in thinking coincides with surging power demand for the grid, AI data centers and industry.

As we reported in March, some researchers think the nickel-based batteries used in most Western EVs, when treated gently, can last decades in a second use. But the Applied Energy paper’s authors single out iron-based lithium-iron-phosphate batteries—the type favored in China—as best for repurposing on the grid and behind AI data centers, because LFP batteries last even longer than nickel-based ones.

“Our main finding is that LFP should be repurposed and in use for as long as possible,” said Anna Cobb, a doctoral student at Carnegie Mellon University and the paper’s lead author. “I would say it’s a good-news LFP story.”

The West is only now starting to make LFP, however. Between two companies—South Korea’s LG Energy Solution and Tesla—the U.S. could be producing more than 100 gigawatt-hours of LFP batteries a year in the next year or two. That is a sliver of China’s LFP production, which last year was 1,400 GWh, putting the country on a pathway to a gigantic assembly line of batteries first going into cars and then into a second use.

Edward Chiang is among those attempting to build up a Western battery repurposing industry. Chiang, CEO of Moment Energy, which launched in 2020 and makes battery systems from used batteries, said battery repurposing is profitable.

A big part of that calculus is tax credits and grants that have survived despite President Donald Trump’s hostility toward any energy source apart from fossil fuels. Chiang is building a 2 GWh battery refurbishing plant outside Austin, Texas, that received a $20 million grant from the Biden-era infrastructure act.

Chiang said his company’s LFP battery system is equivalent in price to a Chinese-made one—around $180 per kilowatt-hour at the system level, including the container that holds the batteries and the power management electronics used to operate them. With the 30% federal production tax credit, he can charge about $125/kWh and undercut both Chinese batteries and new U.S.-made battery systems, he said.

There’s a surplus of used EV batteries, Chiang said—his warehouse is filled to the brim with them, and most have a lot of power left. Moment will often obtain a cast-off EV battery pack that looks depleted, and when staff open it up and test it, they find a single bad module. Remove that, the remaining modules “are closer to 90% to 95% life left, which is incredible,” he said.

Chiang said it’s hard to see how recycling can be profitable over the next decade or more given the high level of spending required to stand up a recycling factory and keep it running. But there will be a time when recycling makes sense, he said—in a couple of decades, when the repurposed batteries he has made have reached their real end of life.

“I pray and hope that in 20 years, once I repurpose these batteries, there will be a recycling side to take those batteries,” he said.