Global automakers have been promoting the idea of reusing electric vehicle (EV) batteries once they lose power.
However, the competition for battery packs and cell materials, as well as the demand for affordable cars, raise concerns about the feasibility of this aspect of the circular economy.
Several startups have emerged, offering second-life energy storage utilizing old EV batteries.
Nonetheless, achieving the viable industry envisioned by car manufacturers like Nissan would require overcoming competition from recyclers and refurbishes, as well as meeting the needs of cost-conscious drivers impacted by the rising cost of living.
Hans Eric Melin, founder of Circular Energy Storage (CES), a consultancy that monitors battery volumes and prices, emphasized that the assumption that EV batteries will only last eight to ten years before being swapped out is misleading.
He believes it will be challenging to make the second-life approach work.
While using second-life EV batteries may be a potential solution for buses, trucks, and other commercial vehicles, it will take more time to implement on a larger scale with passenger cars.
The concept behind second-life energy storage is relatively simple. As EV batteries’ capacity declines below 80% to 85% after eight to ten years of use, they can be repurposed to power buildings or stabilize local and national energy grids.
Investors who believe in the circular economy have provided nearly $1 billion in funding to approximately 50 startups worldwide, according to calculations.
Furthermore, car manufacturers like Mercedes and Nissan have established their own second-life operations.
However, the main obstacle lies in the scarcity of old EV batteries, which shows no signs of easing.
The increasing average age of fossil-fuel cars on the road, currently at a record 12.5 years in the U.S., suggests that many EVs will remain in operation for years, even if their batteries are depleted.
Hans Eric Melin from CES argues that the 80% threshold for battery capacity is an arbitrary number that does not accurately reflect real-life EV usage.
Elmar Zimmerling, the business development manager for automotive at German second-life battery startup Fenecon, acknowledges that there is currently almost no market for second-life batteries as EVs from a decade ago are still in use.
However, he predicts a “tsunami” of batteries within the next five years.
Competition from various organizations using EV batteries to power anything from classic cars to boats has driven prices up to $235 per kilowatt-hour as of late 2022, according to CES.
This is approximately double the price that major car manufacturers pay for new batteries.
For example, a long-range Tesla Model 3 with a 75 kWh battery pack would cost $17,625 on the used market at that rate.
Car and battery manufacturers are increasingly offering energy storage systems using new batteries, such as Tesla and the UK’s AMTE Power, as well as electric sports car maker Rimac from Croatia.
Recycling, although more energy-intensive, poses another form of competition to reusing batteries as the demand for cell materials makes recycling economically compelling. BMW, which operates a second-life battery storage facility at its Leipzig plant, acknowledges that recycling may be a better option when valuable raw materials are involved.
The demand for used batteries for storage is expected to surge as intermittent renewable energy plays a larger role.
The International Energy Agency estimates that by 2030, global battery capacity for grid storage could increase to 680 gigawatt-hours from 16 gigawatt-hours at the end of 2021.
In the UK, the lack of battery storage capacity results in an annual cost of approximately £1 billion ($1.27 billion) to shut down wind farms when the grid doesn’t require the power. It also often necessitates purchasing electricity from Europe during shortfalls.
