Electric cars and trucks seem to have everything going for them: They don’t produce tailpipe emissions, they’re quieter than their fossil-fuel-powered counterparts and the underlying architecture allows for roomier and often sleeker designs. But the humble lithium-ion battery powering these cars and trucks leads a difficult life. Irregular charging and discharge rates, intense temperatures and many partial charge cycles cause these batteries to degrade in the first five to eight years of use, and eventually, they end up in a recycling facility.
Instead of sending batteries straight to recycling for raw material recovery — and leaving unrealized value on the table — startups and automakers are finding ways to reuse batteries as part of a small and growing market.
That’s because the average electric vehicle lithium-ion battery can retain up to 70% of its charging capacity after being removed. The business proposition for second-life batteries is therefore intuitive: Before sending the battery to a recycler, automakers can potentially generate additional revenue by putting it to use in another application or selling it to a third party.
Low consumer uptake and the relatively recent introduction of EVs to the market has kept the supply of used batteries low, but automakers are already pursuing a number of second-life projects.
To name only a few such projects that have popped up in recent years, Nissan is using old batteries to power small robots; French carmaker Groupe Renault, with partners, is launching stationary energy storage systems made with old EV batteries; and Audi Environmental Foundation, the daughter organization of Audi AG, worked with Indian startup Nunam to build solar nanogrids out of used e-tron battery modules.
Other OEMs, like Lucid Motors, BMW and Proterra, are incorporating reuse principles into their battery design. In fact, Lucid has built its batteries to work across its electric vehicle and energy storage products, including in second-life uses, Chief Engineer Eric Bach told TechCrunch. And BMW has used a “plug-and-play” concept with the batteries in its i3 model so that they can be easily removed and inserted into second-life applications, BMW spokesperson Weiland Bruch said in an interview with TechCrunch. “We believe that battery second-life will become its own self-standing business field,” he added.
A new lease on battery life
Automakers are increasingly bullish on second-life uses, though the size of their role in this budding market is still unclear. Matthew Lumsden, CEO of U.K.-based Connected Energy, told TechCrunch that he has noticed a shift in the past two years where some OEMs have begun viewing batteries as an asset rather than a liability.
“I think it’s pretty much exclusively true to say now that [OEMs] see the batteries as an opportunity and they want somebody who can maximize the value of that opportunity,” he said.
Connected Energy works with OEMs in a number of different arrangements to put used electric vehicle batteries in energy storage systems. The company buys used batteries from carmakers outright, through leasing agreements, or under a shared revenue model. It’s part of a growing suite of companies that specialize in repurposing old EV battery packs that includes Oklahoma City-based Spiers New Technologies Inc (SNT).
Around 80% to 90% of the batteries SNT receives are from automakers, with the rest sourced from auto dismantlers, according to the company. The share of batteries that will come from dismantlers “will grow over time,” SNT founder Dirk Spiers told TechCrunch.
“Electric vehicles are still relatively young,” he said. “The first electric vehicles came on the market December 2010, so we’re now about 10 years in that we have cars on the road. So the scrapyard percentage is relatively small, but it will be going up in the future.”
The ultimate fate of a used EV battery appears to be out of automakers’ hands unless they go out of their way to retrieve it, or unless it returns to them within the battery warranty period or through trade-ins. Lumsden pointed out that OEMs are just one piece of the jigsaw puzzle, and not all of them are interested in maintaining a long-term stake in the battery. Tesla, the largest manufacturer of electric vehicles in the U.S., is perhaps the most conspicuous example of an automaker that has never made a move to reuse its batteries.
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Automakers cashing in
A handful of automakers are taking a more active role in managing the complete battery life cycle. Most recently, VW Group at its inaugural Power Day event outlined a “closed loop” approach to the battery that includes production, first- and second-use applications and recycling. Other automakers, like China’s NIO, are pursuing a “battery-as-a-service” business model that lets customers purchase the vehicle shell without the battery and instead pay monthly for a battery subscription service — used batteries can be swapped at roadside stations in minutes.
Leasing or battery subscription options may be especially attractive for electric fleets or heavy-duty vehicles, as batteries will likely need to be changed multiple times over the lifetime of the vehicle. Hyundai in February announced an arrangement with South Korean taxi operator KST Mobility to sell EVs and lease the batteries. Once the batteries are used and replaced, LG Energy Solution will install the batteries in energy storage units to act as chargers for the KST fleet.
Electric bus company Proterra also offers a battery leasing program that it says lowers the upfront cost of an electric bus to roughly around that of a standard diesel or natural gas-powered bus. Under the program, Proterra guarantees a battery replacement in six years. Although the company hasn’t received any old batteries back yet, it is already planning its second-life strategy in energy storage.
The company is well positioned to pursue energy storage applications with second-life batteries, because it already installs and manages charging infrastructure for its customers. “And those are all ready to be connected to a stationary battery,” Proterra CTO Dustin Grace told TechCrunch. Adding a storage system to an EV charger can provide additional benefits like letting customers charge their vehicles when energy is cheapest, Grace said.
“It’s really about the access to batteries,” Hans Eric Melin, managing director of Circular Energy Storage Research and Consulting, said, adding that battery ownership is crucial for automakers that want to play a role in the second-life battery market. “If second-life should be important for [OEMs], they basically have to own the battery, because otherwise they are like any of us — they are people that don’t own the batteries and have to purchase them first.”
Not a solo venture
Looking to the future, the business case for second-life batteries will depend on factors such as advances in battery technology, supply chain security, the efficiency of recycling and the price of raw EV battery materials.
Not all OEMs have developed a good way to monitor and track battery health while it’s in the vehicle, Lumsden said, which makes battery health assessment more costly and time-intensive once they’ve been removed from the chassis.
Both Lucid and Proterra, for example, use electronic systems that monitor the condition of the battery throughout its first-use life.
“It all depends: Can you make a strong business case around it?” Spiers said.
A study published in Energy Economics last October found that the second-life value of an EV battery could be as cheap as $100 per kilowatt-hour if it is repurposed with a remaining charging capacity of 77%. But research firm BloombergNEF has separately estimated that the average price of a new lithium-ion battery pack could be close to $100 per kilowatt-hour by 2023.
Recycling is in
While using EV batteries in second-life applications is an enticing concept, the cost of removing and testing each battery module can quickly add up, Sam Jaffe, managing director of Cairn Energy Resource Associates, told TechCrunch. As the cost curve for battery cells continues to decline, automakers may not want to incur the associated cost of rebuilding a used EV battery in a new system.
“What’s the other alternative? If the other alternative is throwing it away into a landfill, of course [automakers should] reuse it,” he said. “But the other alternative will be recycling.”
Jaffe thinks we’ll reach a point in the near future where 99% of all lithium-ion batteries will end up at recycling plants.
“99% of lead acid batteries are recycled,” he pointed out. “I used to think that was because of regulations, because obviously every government wants lead out of the system. It’s not. It’s because it’s economically worthwhile to the companies to do that. It’s cheaper to melt down the lead and reuse it than to mine it. The exact same forces are at work with the lithium-ion.”
Lumsden echoed the sentiment, saying it’s inevitable that a certain portion of batteries will go straight to disassembly and recycling after leaving a vehicle, whether that’s because they are too degraded or have sustained damage.
In the past few years alone, companies like recycling startup Redwood Materials, Sweden-based Northvolt, and Canadian company Li-Cycle have initiated operations to process used EV batteries. Redwood told TechCrunch that it recovers 95%-98% of the elements from batteries and that it is now the largest lithium-ion battery recycler in North America. Meanwhile, automakers like Volkswagen have set ambitious targets to recycle 95% of each battery pack.
Governments in Europe, China and the United States — and the automakers — are in agreement that used EV batteries should be kept out of landfills. But the number of batteries that will live two lives is far from clear at this point.
“We’re at the ripple before the ripple before the first wave,” Lumsden said.
This article has been updated to reflect that Box of Energy AB is no longer operational.
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