Putting second life into context with EV battery reuse

4th February 2021
Alex Lynn

With a sustained growth of electric vehicles globally, environmental upsides of second life batteries have driven EV battery reuse market share. Second life of used EV batteries will potentially represent an invaluable business model for OEMs and equipment providers. As sustainability becomes paramount for stakeholders, including regulators, investors and end-users, automakers have upped investments in used EV batteries.

At a time when EVs have become a viable steward of the environment, bullish outlook of EVs will count on the economical potential for battery reuse. A thriving market for EVs will propel the second life batteries for low-cost storage for electricity and utilities. Forecasts from Global Market Insights have predicted EV battery reuse market size to surpass $1.5bn by 2026.

Reuse can add value to the market as EV companies gear to position themselves as green and have more circular and efficient battery systems. It is pertinent to mention that the life of lithium-ion batteries on the road is allegedly around ten years, with reuse of li-ion batteries serving as a means to boost economies.

The practice of reuse will reduce early and unsustainable disposal of li-ion batteries as demand for lithium has been staggering today. According to IEA, 17 Kt lithium material was demanded for the batteries in 2019. In the next decade, li-ion battery will potentially rule the roost in the EV industry with a slew of potential technologies coming to the fore—lithium-sulphur, lithium-metal solid state battery, lithium-air and sodium-ion.

A portfolio that is garnering considerable attention in the likelihood to reuse lithium-ion batteries in second life. To put this in perspective, reusing batteries from EVs in energy storage solutions have received thumbs up from leading companies such as BMW, Nissan, Renault and Daimler, to name a few.

Amidst soaring demand for electric cars, Nissan opened Japan’s first plant specialised in the reuse and recycling of lithium-ion batteries from EVs in 2018. The new factor is apparently being operated by Nissan, Sumitomo Corp. and 4R for various purposes, including the growth of stationary power storage solutions.

In a bid to boost energy storage solution, these companies have taken a myriad of initiatives, including energy storage systems in commercial and industrial spaces, regional and national electricity grids and underpinning both residential and public charging stations.

Battery reuse in second-life for services in electric utilities, residential and commercial consumers will boost the lifetime of batteries and reduce environmental impact, costs and emissions during manufacturing new batteries.

Large scale retirements of electric vehicle batteries will potentially be witnessed within the next five to ten years. According to an estimate, around 100-120 GWh of EVs will be retired by 2030, a volume equivalent to current annual battery production. In a stark contrast to consumer electronics such as mobile phones and laptops, batteries retired from EVs could retain around 70 to 80% of their initial capacity.

The shift of EVs into mainstream use will potentially disrupt the automotive value chain and energy storage solution. Reuse will boost energy-storage applications which need less-frequently battery cycling.

Impressive demand for BEVs has augured well for lithium-ion batteries as the latter can provide enough energy and power in a single charge to make the driving experience in line with an auto run with a gasoline engine.

Statista claims that there were around 4.8 million battery electric vehicles in use globally, with about 1.5 million new BEVs being added in 2019. While the COVID-19 outbreak has had an impact on global vehicles markets, how stakeholders respond to the outbreak will redefine the transition to EVs.

Building a competitive moat in battery electric vehicles industry, leading companies are likely to boost their business strategies. For instance, Tesla has revealed plans to reduce electric battery costs and build a $25,000 electric battery vehicle within three years.  These bullish sentiments are likely to be major cash cows in EV battery reuse industry.

Well-established players are exploring opportunities in which retired batteries are utilised in applications spanning from residential and commercial and grid-scale energy storage solutions and in EV charging and base stations. Second-life batteries will provide significant value opportunity across energy storage and automotive industries.

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