Second-life battery storage technologies are struggling to be a cost-competitive technology against first-life Li-ion battery energy storage systems (BESS). In their report on the topic, “Second-life Electric Vehicle Batteries 2025-2035: Markets, Forecasts, Players, and Technologies”, IDTechEx explores various means for repurposers to generate revenue within the sector including renting systems and incentivizing automotive OEMs to share revenues.
Second-life batteries are most likely to be used for commercial and industrial applications such as providing backup power at events, festivals, and construction sites. The process of generating revenue from repurposed battery systems can be repeated each time if they are rented out, generating continual revenue from just a system rather than being sold for a one-time fee. This one-time fee could be a barrier for customers who do not have the upfront capital to purchase the battery.
Revenue streams and incentives for OEMs
For lower cost and less time-consuming battery disassembly, repurposers have requested that electric vehicle (EV) batteries be manufactured differently to accommodate this. Cell-to-pack designs, despite their energy density benefits, are held together with many structural adhesives and welds, making it expensive to dismantle for both recycling and repurposing means.
Receiving retired batteries for repurposing opportunities at lower costs from OEMs could be achieved by proposing revenue-sharing opportunities further downstream in the value chain. If automotive OEMs or original battery owners/producers are promised some of the revenues from the re-selling or operation of second-life batteries, they may be more incentivized to get on board. Working alongside repurposers by supplying them with end-of-life EV batteries at lower costs and opting for less complex assemblies will not only help make the process more straightforward and cheaper overall but could, in turn, see OEMs receiving increased revenue as the second-life battery market expands. The ability for repurposers to sell or rent out these batteries at lower costs could hopefully lead to greater customer demand, and greater revenue for all parties as a result.
Battery testing and reduced warranties
IDTechEx reports the potential for battery testing times to speed up with the rise of advanced technologies, which could, in turn, lower overall repurposing costs. With smaller form-factor testing technologies also emerging, tests can be carried out at service workshops without a need to remove the battery from the EV. This may create scope for a partnership between OEMs, repurposers, and service workshops, whereby these resulting lowered costs from new battery testing approaches are mutually beneficial, as second-life batteries could be provided at more competitive prices to customers while taking some of the responsibility and thus costs of battery testing away from repurposers.
Another source of revenue within the market could come from repurposers disassembling batteries to module or cell level, replacing faulty parts, and supplying the refurbished battery packs to EV manufacturers with reduced warranties for customers. Modules and cells could also ideally be supplied to service workshops; however, not many repurposers do not necessarily have the supply chains to carry out these specific processes.
Second-life battery market predictions
Within the EU, IDTechEx reports that most OEMs will likely head straight towards recycling end-of-life batteries, rather than opting to repurpose them, as fewer policies are in place to encourage repurposing. This will especially be the case for higher-value EV batteries containing nickel and cobalt. The EU Battery Regulation also requires industrial and electric vehicle batteries to have minimum contents of cobalt, nickel, and lithium by 2031, with the amount set to increase again by 2036, meaning automotive OEMs and battery manufacturers may still lean towards recycling batteries to fulfill these requirements.
IDTechEx reports that while there is scope for revenue to be made from operating in second-life battery markets, there is still a need for greater incentives surrounding repurposing them and opportunities to incentivize revenue-sharing opportunities with automotive OEMs.
