February 1, 2022
3.4 million used electric vehicle (EV) batteries are expected to hit the market by 2025, representing a cumulative capacity of 95 GWh and potentially meaning just as much hazardous waste.
Environmental regulations are growing more and more stringent, especially in Europe, and disposing of such amounts of used batteries is hardly conceivable, while recycling processes are yet not convincing from an ecological standpoint.
However, developing business models supporting the extension of batteries’ lifetime in second life applications is a promising market
Batteries made for the electric powertrain are designed to last longer than those in consumer products. Experts predict that these rugged industrial batteries should still have up to 70 percent capacity after 10 years of service of driving on electric propulsion.
If such a long life can be expected, then it will make sense to test and re-purpose the batteries for a less demanding application. Several companies, including GM and ABB, are taking advantage of this business opportunity.
Large-scale batteries are divided into smaller modules that are connected in series and parallel. These units do not need cell-level checking but must meet state-of-health requirements as a module that includes capacity, internal resistance and self-discharge. Modules with similar performance levels can then be grouped together and used for solar and other systems.
There are several challenges with battery refurbishment such as standardization, falling cost and regulations
• There are many battery-pack designs on the market that vary in size, electrode chemistry, and format (cylindrical, prismatic, and pouch).
• Each battery is designed by the battery manufacturer and automotive OEM to be best suited to a given EV model, which increases refurbishing complexity due to lack of standardization and fragmentation of volume.
• Up to 250 new EV models will exist by 2025, featuring batteries from more than 15 manufacturers.
• For large scale battery refurbishment to work there will need to be standardization across battery design
As new batteries become cheaper, the cost differential between used and new diminishes, given that the rate of decline in remanufacturing cost is expected to lag the rate of decline in new manufacturing cost.
McKinsey estimates that, at current learning rates, the 30 to 70 percent cost advantage that second-life batteries are likely to demonstrate in the mid-2020s could drop to around 25 percent by 2040.
This cost gap needs to remain sufficiently large to warrant the performance limitations of second-life batteries relative to new alternatives.
Due to technology maturity and lack of R&D studies no guarantees exist regarding second-life-battery quality or performance,
Currently few industry standards focus on battery-management systems or state-of-health disclosures, let alone standard performance specifications for a battery that is to be used for a given application.
While most markets have some form of regulation requiring the recycling or remanufacturing of consumer electronics in general, most markets do not have EV-battery-specific requirements or delineations of responsibility between the producer and the consumer, save a few examples where goals have been set (such as in California and China).
The lack of regulation creates uncertainties for OEMs, second-life-battery companies, and potential customers. The lack of regulation also gives rise to regional differences regarding whether recycling or reuse is the dominant pathway.
