How to Give EV Batteries a Second Life

Today’s electric vehicles (EV) batteries don’t last forever. But they could last a little longer, if we can figure out how to give them a second life.

Second-life batteries present an intriguing business opportunity as well as a chance to increase EV sustainability—but there are a few challenges left to solve.

Second-life batteries are batteries that have reached the end of their primary application life, but still have enough capacity to be used in less demanding applications. Manufacturers usually suggest replacing Li-ion batteries when they reach 70 to 80 percent of the initial rated capacity. This reduced capacity cannot guarantee the required performance and safety for primary applications—like EVs—but the batteries could still be used in many other applications, such as renewable energy storage, EV charging stations, forklifts, and power grid applications for frequency regulation and peak shaving.

Second-life batteries can be a key contributor to increasing the adoption of EVs. They can directly influence affordable charging infrastructure, reduce battery costs and environmental impacts, and contribute to the sustainability of the battery market. They can also offset the price of EVs, of which batteries are the most expensive component (typically around two-thirds of the total EV cost).

In the battery business, the circular economy is key for providing price competitiveness, affordability, environmental accessibility, and sustainability. Disposal of old batteries is environmentally damaging, demanding, and complex as they usually contain harmful metals and toxic chemicals. Still, many batteries are inappropriately discarded in the environment every day, causing immense damage.

New batteries are more efficient and developed to last longer, so their premature disposal is a waste of resources. Instead of discarding these batteries, it is more efficient to give them a second life in form of the repurposing, refurbishment, or recycling.

Battery recycling (recovering the key materials) is standardized and affordable for lead-acid batteries, but recycling Li-ion batteries still has many barriers to overcome. These include a lack of standards, a high price, and high energy demand, as well as challenges with high battery density. Since there are just a few places providing proper recycling technology, many batteries must be transported, causing logistical and safety problems as well as increasing costs. Currently, the cost of recovering materials is comparable to the cost of raw materials.

An Effective Second-life Battery Approach

Rather than recycling worn-out batteries, repurposing them for less demanding applications can increase battery lifetime and revenue for manufacturers. It also helps preserve the environment by buying time for manufacturers to develop effective recycling facilities. When considering the drawbacks of today’s battery recycling technology, reusing batteries looks like the more environmentally-friendly option at the moment.

Besides environmental benefits, battery reuse has business benefits as well. It helps companies to achieve carbon credit requirements. Integrating second-life batteries into the power system can postpone building new power generation plants and make renewable energy systems more accessible.

The second-life battery business includes removing batteries from EVs and integrating them into other applications. The first step of the business strategy is identifying the key customers and the value that can be offered to them.

Residents, companies, and energy producers who want to install renewable energy will consider energy storage systems (ESSs). Second-life batteries can offer lower-cost ESSs.

Utilities can benefit from affordable ESSs through effective frequency control, quick energy reserves, power management, and postponing investment in new infrastructure.  

Companies that manufacture or use batteries have the potential to increase their business with second-life battery services.

In a March 2023 Journal of Energy Chemistry article entitled “Towards a business model for second-life batteries—barriers, opportunities, uncertainties, and technologies,” battery researchers discuss several potential business models for second-life batteries.

The paper highlights three business models: the closed market, the intermediary-based market, and the open market.

The closed market model means that the original equipment manufacturer (OEM) rents the batteries to EV owners. When the batteries reach the end of their life, it is the OEM’s responsibility to recycle them (collecting, testing, classifying, and repurposing). This business model is important for OEMs who want to protect their technology and are not willing to share key battery information outside the company. However, they must be able to implement the whole recycling process.

In the intermediary-based market model, OEMs make agreements with logistics companies who are responsible for the recycling process. They collect spent batteries with or without the cooperation of other companies that develop and distribute ESSs, EV charging stations, etc. The logistics company is the link between the OEM and end-user, meaning OEMs must share the relevant information and data about their technology with the intermediary. This presents a risk for OEMs, who also weaken the chance for future business in this area and potentially damage their brand if their batteries do not provide good performance in secondary applications.

The open market model includes market operators to connect battery customers and sellers through online platforms. The platforms should manage inventory considering the supply and demand of second-life batteries. As intermediaries, market operators earn a percentage of the transaction value. However, the platforms have to be capable of supporting and assisting customers in specifying the batteries and ESS specifications. The open market is probably the most challenging model, as it requires well-developed blockchain technology to protect sellers and buyers, and battery prices are individualized to account for different histories and operating conditions. 

Battery manufacturers are the most suitable candidate for managing second-life battery applications. They know the most about the batteries, their design, how they degrade, the performance of the spent batteries, and for which applications they are most suitable. They also know how to adapt the batteries and optimize performance for a given application. Battery manufacturers will play a key role in defining the standards and regulations for second-life battery applications.

Despite the advantages, reusing batteries has some uncertainties. It is an open question whether the amount of batteries currently in use is sufficient to cover the needs of the secondary application market.

Furthermore, there are no regulations about the required performance of second-life batteries or product warranty conditions for the customer. The business structures are still not clearly defined, such as the testing procedures for reused batteries and the procedures of replacing and transporting the batteries. Since battery prices are decreasing, the price competitiveness of used batteries is questionable as well.

Manufacturers are cautious about this business opportunity, both because their battery data is confidential and for fear that second-life batteries could affect their core business. Direct recycling sounds a more effective option for manufacturers, but it requires expensive and complex infrastructure. Second-life batteries could be a transition phase while recycling facilities are established.  

For more on the applications of second-life batteries, read: EV Batteries Find New Purpose On and Off the Grid.