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Tesla’s spiraling brand reputation crisis has hit its EV sales so hard that the much-hyped Tesla Cybertruck was reportedly outsold by General Motors’s GMC electric Hummer in Q2. Now GM has spotted an opportunity to horn in on Tesla’s Megapack utility scale energy storage business, too — with an assist from none other than Tesla co-founder and former CTO JB Straubel.

General Motors Spots An Energy Storage Opportunity

There’s a lot of history to unpack here, so let’s start with the fresh news first. On July 16, GM and Redwood Materials announced their intention to collaborate on utility-scale energy storage systems in the US, aiming squarely not at EVs but at the burgeoning needs of the AI data center boom.

That’s an interesting turn of events for GM. Here in the US, the EV market is somewhat uncertain these days. The Republican majority in Congress decided to make the $7,500 EV tax credit expire on September 30, raising the specter of a doomslide into negative sales territory for all EV makers, not just Tesla. However, if GM can successfully market batteries for stationary energy storage, it may be able to offset some of the EV losses until the electric mobility market — and the political situation — both improve.

After all, why let good energy storage technology go to waste? GM has been pitching its Ultium EV battery platform since 2019. In the latest development, earlier this week, GM’s Ultium Cells venture with LG Energy Solution announced its intention to commercialize new low-cost EV lithium-iron-phosphate batteries by late 2027.

The new agreement with Redwood Materials comes just about a month after Redwood announced its new Redwood Energy branch, aimed at using new batteries and second-life EV batteries for “fast, low-cost energy-storage systems built to meet surging power demand from AI data centers and other applications,” Redwood and GM stated in a press release that takes a shot across the bow of Tesla’s AI data center Megapack business.

The new agreement calls for the use of GM’s second-life (aka used) EV batteries as well as newly GM manufactured batteries, too. In a press statement, GM and Redwood both emphasized that the new batteries would be Made in the USA batteries, going right up against Tesla’s domestically manufactured Megapack brand (Megapacks are made in California, with a secondary facility in Nevada).

Kurt Kelty, VP of batteries, propulsion, and sustainability at GM, also chipped in his two cents. “The market for grid-scale batteries and backup power isn’t just expanding, it’s becoming essential infrastructure,” he said in a press statement announcing the new agreement.

“Electricity demand is accelerating at an unprecedented pace, driven by AI and the rapid electrification of everything from transportation to industry,” added Redwood CEO JB Straubel. He founded Redwood in 2017, shortly before leaving his CTO position at Tesla, to seek new opportunities in the lithium-ion battery recycling field.

New Life For Second Life EV Batteries

The new collaboration builds on a second-life EV battery collaboration between GM and Redwood, in which GM batteries have been deployed at a Redwood facility in Nevada to provide energy storage for the AI infrastructure firm Crusoe. At 12MW/63MWh, the storage system is billed as the largest second-life battery system in the world, and the biggest microgrid system in North America, too.

Repurposing used EV batteries may seem like a step downward from the glamorous universe of Tesla into the nuts-and-bolts world of waste management, but money talks. By 2023, Redwood assembled $4 billion in funding including a $2 billion conditional loan guarantee from the US Department of Energy.

Besides, extracting lithium from spent batteries is just part of Redwood’s business plan. Using the lithium to make new battery elements is another part. “We’re building a huge (Airbus A380 for scale) cathode plant with more than 1 million EVs/year of capacity at our Nevada Campus,” Straubel announced last year. “We’re reducing both the construction cost and the build time through ambitious and detailed engineering, focusing on innovative practices in the plant’s very design and development.”

“Cathode accounts for >50% of a battery cell’s cost but today, manufacturing is based entirely outside of North America,” he added (see more Redwood background here).

More Energy Storage Competition For Tesla

Like Tesla, GM and Redwood are moving past an initial focus on EV batteries to exploit new opportunities in the stationary energy storage business. In Tesla’s case, the Megapack has been a lifesaver. As widely reported here and elsewhere, Tesla’s EV sales are sliding downwards in Europe, the US, and other key markets, but Megapack sales are booming.

On GM’s part, the new energy storage venture could provide the company with some financial wiggle room until the current occupant of the White House turns the reins of federal government over to more responsible hands — peacefully this time, one hopes.

GM has not exactly been sitting around waiting for the wheels of the next presidential election cycle to begin turning. On July 14, GM president Mark Reuss posted a recap the activities of his company’s Ultium Cells venture under the headline, “From Tennessee to Michigan, GM is building a battery-powered future.”

“With the Ultium Cells sites in Spring Hill and Warren, Ohio, GM has the largest OEM battery cell manufacturing capacity in this country,” Reuss stated, affirming GM’s intention to manufacture several different kinds of battery chemistries including NCMA (nickel cobalt manganese aluminum) pouch cells as well as the forthcoming LFP batteries and an LMR (lithium manganese rich) formula.

“GM plans to be the first company to produce LMR prismatic battery cells at commercial scale. This advancement is key to delivering the best mix of range, performance, and affordability for our EV customers,” Reuss added.

“Our expertise in these three battery chemistries will enable us to scale production of lower-cost LMR and LFP cell technologies so we can produce both full-size electric pickups and affordable EVs like the Chevrolet Bolt,” Reuss added again for good measure, in case anyone needs an extra reminder that GM intends to sell more EVs, not fewer, in the coming years even without support from the tax credit.

Reuss also took the opportunity to refresh GM’s tune on EV sales. For the past several years, GM has regularly boasted that it is the #2 seller of EVs in the US, second only to industry leader Tesla. As of July 14, that’s over. Reuss concluded his post by asserting that GM is of the opinion that “we’re in a better position than any other automaker to lead the industry, and the country, on this road to the future.”

What do you think, is the nation’s #2 automaker nipping at the heels of Tesla, or will Tesla remain on top indefinitely?

Image (cropped): In a page torn out of the book of Tesla, GM has embarked on a new utility-scale stationary energy storage collaboration with the US EV battery recycling firm and cathode manufacturer Redwood Materials (courtesy of GM).