Global automakers have been promoting plans to reuse electric vehicle (EV) batteries once they lose power. However, competition for battery packs and cell materials, as well as the demand for affordable cars, cast doubt on this aspect of the circular economy. A variety of startups offer second-life energy storage using old EV batteries. But creating the viable industry envisioned by carmakers such as Nissan would mean fighting off competition from recyclers, refurbishers, and the needs of drivers squeezed by the cost-of-living crisis. While a possible solution for buses, trucks, and other commercial vehicles, it will take longer for batteries from passenger cars to be reused at scale.
The second-life energy storage idea is simple in theory. As EV batteries’ capacity falls below 80%-85% after eight-to-10 years of use, 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 reused, have provided around $1 billion in funding to nearly 50 startups globally.
The problem is a lack of old EV batteries that shows no sign of easing. The rising average age of fossil-fuel cars on the road suggests many EVs will stay on the road for years to come, even if their batteries are depleted. Competition from outfits using EV batteries to power anything from fossil-fuel classic cars to boats pushed prices to $235 per kilowatt hour in late 2022, according to consultancy Circular Energy Storage (CES) – around double the price major carmakers pay for new batteries.
Car and battery-makers increasingly offer 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 to reuse as demand for cell materials makes it economically compelling.
Demand for used batteries for storage is likely to soar as intermittent renewable energy takes on a bigger role. By 2030, global battery capacity for grid storage could grow to 680 gigawatt-hours, from 16GWh at the end of 2021, the Paris-based International Energy Agency estimates. Britain alone pays around £1 billion ($1.27 billion) annually to switch off wind farms when the grid does not need the power, and there is no way yet to store it because of the battery shortage. It also often has to buy electricity from Europe when it has a shortfall.
The biggest issue is people keeping their vehicles longer. Even when their owners part with them, many cars simply disappear and are often sold overseas. Commercial vehicles provide the best hope thus far for second-life batteries, industry officials said. London-based startup Zenobe, for instance, teams up with bus companies wanting to go electric. They buy the buses, but Zenobe buys and manages the battery, then takes it for second-life energy storage. Since 2017, Zenobe has raised around $1.2 billion in debt and equity funding. 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.
