General Motors Co. is selling new battery packs and used electric vehicle batteries to a recycling company for use powering massive data centers, the automaker said Wednesday.

GM signed a nonbinding memorandum of understanding with Nevada-based Redwood Materials to provide new battery packs for use as energy storage systems.

Energy storage systems hold electric, solar and wind energy to power data centers and EV charging stations, among other things. Think of them as power banks, such as portable chargers used for phones, on steroids.

“The market for grid-scale batteries and backup power isn’t just expanding, it’s becoming essential infrastructure,” Kurt Kelty, GM’s vice president of batteries, propulsion and sustainability, said 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. We’re not just making better cars — we’re shaping the future of energy resilience.”

GM plans to make battery packs for Redwood at an existing Ultium Cells LLC battery plant but is not yet sharing which one, GM spokesperson Jack Crawley said. Ultium has plants in Warren, Ohio, and Spring Hill, Tennessee.

Ultium is GM’s joint venture with LG Energy Solution.

For GM, the deal with Redwood marks a significant step outside the auto industry and into the growing energy market.

Using existing plants for energy storage systems batteries could help offset a potential dip in the EV market after federal tax credits expire in September, although Crawley said the move is part of a long-term GM strategy to diversify.

Ultium first partnered with Redwood in 2024 to sell scraps from its manufacturing sites, Crawley said. GM also sells used EV batteries to Redwood.

“Electricity demand is accelerating at an unprecedented pace, driven by AI and the rapid electrification of everything from transportation to industry,” Redwood founder and CEO JB Straubel said in a statement. “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 is a Tesla Inc. co-founder and previously served as the company’s chief technology officer.