Global automakers have touted plans to reuse electric vehicle (EV) batteries when they lose power, but competition for battery packs and cell materials, and an appetite for affordable cars, cast doubt on this part. of the circular economy.

A variety of startups offer second-life energy storage using old EV batteries.

But creating the viable industry envisioned by automakers like Nissan would mean fighting competition from recyclers, restorers and the needs of drivers affected by the cost-of-living crisis.

“The assumption that electric vehicle batteries will only last eight to 10 years and then owners will swap them out is simply not true,” Hans Eric Melin, founder of consultancy Circular Energy Storage (CES), which tracks volumes and battery prices. said he. “It’s going to be hard to make the second life work.”

While a possible solution for buses, trucks and other commercial vehicles, passenger car batteries will take longer to reuse on a large scale.

The idea of ​​second-life energy storage is, in theory, simple.

As the capacity of EV batteries falls below 80-85 percent after eight to 10 years of use, the theory goes, they will be reused to power buildings or even balance local and national power grids.

Investors who believe in the circular economy, in which products and materials are repaired and reused, have provided around $1 billion (approximately Rs 8,197 crore) in funding to nearly 50 start-ups around the world, according to estimates. from Reuters.

In addition, automakers from Mercedes to Nissan have set up their own second-life operations.

The problem is a lack of old EV batteries that shows no signs of relief.

The increasing average age of fossil fuel-powered cars on the roads, now a record 12.5 years in the US according to S&P Global Mobility, suggests that many electric vehicles will remain on the roads for years to come, even if your batteries run out.

“The 80 percent threshold is an arbitrary number that does not reflect the actual use of EVs,” said CES’s Melin.

With electric vehicles built a decade ago still in use, Elmar Zimmerling, business development manager for automobiles at German second-life battery startup Fenecon, said there is “virtually no market for second-life batteries” in the although he predicts a “tsunami” of batteries in the next five years.

twice the price again

Competition from teams using EV batteries to power anything from classic fossil fuel cars to boats has pushed prices to $235 (roughly Rs. 19,266) per kilowatt hour by the end of 2022, according to CES, roughly double the price. that major car manufacturers pay for new batteries.

The long-range Tesla Model 3 has a 75 kWh battery. At that price, it would cost $17,625 (roughly Rs. 14.45 lakh) on the used market.

Car and battery manufacturers are increasingly offering energy storage systems using new batteries, from Tesla to the UK’s AMTE Power and even Croatian electric sports car maker Rimac.

Although more energy and therefore carbon intensive, recycling also presents another form of competition for reuse, as the demand for cellular materials makes it economically attractive.

“The big question is, if you have some pretty valuable raw materials in a battery and you ask ‘how can I get the most out of it?’ the answer is that recycling might be better,” said Thomas Becker, director of sustainability at BMW, which has a second-life battery storage facility at its Leipzig plant.

Increased demand

Demand for batteries used for storage is likely to skyrocket as intermittent renewable energy assumes a larger role.

By 2030, global battery capacity for grid storage could grow to 680 gigawatt-hours, from 16 GWh at the end of 2021, according to estimates by the Paris-based International Energy Agency.

Britain alone pays around £1 billion ($1.27 billion, about Rs 10,433 crore) annually to shut down wind farms when the power is not needed by the grid; there is still no way to store it due to battery shortage. Often you also have to buy electricity from Europe when you are in deficit.

The American startup Smartville has found a solution in the purchase of electric vehicle packages canceled by insurers. Because they cannot assess the extent and cost of minor damage to EV batteries, entire cars have been scrapped, often with nearly 100 percent battery capacity.

CEO Antoni Tong estimates that more than 1 GWh of recovered batteries will hit the US market annually by 2026.

He said the company was trying to deal directly with insurers because restorers and foreign buyers often outbid them at Tesla battery salvage auctions.

Disappearing in nature

The biggest problem is that people keep their vehicles longer. Jonathan Rivera, a resident of Coeur d’Alene, Idaho, illustrates the challenge.

Last September, he became the third owner of a used 2011 Nissan Leaf which he bought for $3,750 (approximately Rs. 3,07,443).

After 12 years of use, the electric car’s driving range had dropped to 40 miles (64 km) from 120 miles.

That wasn’t a problem for Rivera, who used it to commute 18 miles to work and did without the heater in the winter because the battery died.

You just sold the car for $3,000 (roughly Rs. 2,45,954) to pay off credit card debt, but you want another used EV.

“That car handled 90 percent of my driving needs,” Rivera said. “If treated well, it should last another five or six years.”

Even when their owners say goodbye to them, many cars simply disappear (in the UK, for example, the figure is around 20 per cent) and are often sold abroad.

“A Nissan Leaf that’s been out in the wild for 10 years, is there very limited visibility of where that battery is?” said Asad Hussain, a partner at Mobility Impact Partners, a transportation-focused private equity firm. “How do you get it back?”

Commercial vehicles offer the best hope yet for second-life batteries, industry officials said.

London-based startup Zenobe, for example, partners with bus companies that want to go electric. They buy the buses, but Zenobe buys and manages the battery, later taking it for second life energy storage.

Since 2017, Zenobe has raised around $1.2 billion (approximately Rs 9.838 crore) in debt and equity financing. It owns 435 megawatt-hours of batteries in around 1,000 electric buses in the UK, Australia and New Zealand, which should grow to 3,000 buses by 2025.

Founding director Steven Meersman said that once Britain’s 40,000 buses go electric, they will have 16 gigawatt-hours of batteries on board, about a third of Britain’s peak demand in 2022.

“That’s a gigafactory on wheels waiting to happen,” he said.

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© Thomson Reuters 2023