The Road to Reusing EV Batteries: Opportunities and Challenges
The automotive industry is in the midst of a transition towards electric vehicles (EVs) to address concerns over climate change and air pollution. Global automakers have touted plans to re-use EV batteries when they lose power in a circular economy. However, the competition for battery packs and cell materials, and the appetite for affordable cars cast doubt on this part of the circular economy. In this blog, we will dive deep into the topic, unraveling the opportunities and challenges that lie before us.
An array of startups offers second-life energy storage using old EV batteries. As the capacity of EV batteries falls below 80%-85% after eight-to-10 years of use, the theory goes, they will be repurposed to power buildings or even balance local and national energy grids. Investors believing in the circular economy, where products and materials are repaired and re-used, have provided around $1 billion in funding to nearly 50 startups globally, according to Reuters calculations.
In addition, car manufacturers from Mercedes (MBGn.DE) to Nissan have set up their own second-life operations. However, the problem is a lack of old EV batteries that shows no sign of easing. “The assumption that EV batteries are only going to last eight-to-10 years and then owners will swap them out is just not true,” Hans Eric Melin, founder of consultancy Circular Energy Storage (CES), which tracks battery volumes and prices, said. “It’s going to be tricky to make second-life work.”.
EV Battery Innovation
As compared to the luxury segment of the EV market, which shows significant growth patterns, the affordable EV segment’s paradigm is different. With affordability comes the significant compromise on range, battery life, and most importantly, the price of batteries. The question remains: who will bear the cost of reusing the batteries? Car owners may not want to part with their batteries, given the high price of replacing them. Thus, the onus lies on the manufacturers to take the lead in thinking about reusing batteries.
“The 80% threshold is an arbitrary number that does not reflect the real-life usage of EVs,” CES’ Melin said. It is estimated that the batteries still have at least 70% of their life left at this stage. This opens up the possibility of repurposing batteries for other uses, such as energy storage for industrial and commercial spaces. The global energy storage market size is estimated to be $13.07 billion in 2020 and is projected to reach $19.04 billion by 2025, growing at a CAGR of 7.8% during the forecast period.
Moreover, in the circular economy, reusing EV batteries offers a sustainable solution and ecosystem that could provide advantages in the following areas: carbon reduction, waste management, and ethical responsibility. Reusing batteries will help bridge the gap in the supply chain for raw materials, creating a more robust and resilient supply chain.
The global race is on for the best batteries, with countries investing millions to build their supply chain to reach the future of electric vehicles. The rise of electric mobility is a fundamental change for the automotive industry and will require all stakeholders to collaborate to build new value chains. The lack of old EV batteries may slow down the transition, but it will require a collective effort to reimagine the lifecycle of EV batteries. Reusing batteries could create a sustainable solution that benefits the environment, society, and the economy. In conclusion, the road to reusing EV batteries may be challenging, but it’s worth the journey.