After a Li-ion battery has served its first life in an electric vehicle (EV), automotive OEMs will be faced with deciding whether to send these batteries for recycling or for repurposing into second-life applications such as stationary battery storage. As written in their new market report, “Second-life Electric Vehicle Batteries 2025-2035: Markets, Forecasts, Players, and Technologies”, IDTechEx estimates that by 2035, the global second-life electric vehicle batteries market will reach US$4.2B in value. The growing availability of retired EV batteries will be a critical factor that will influence the growing penetration of second-life battery storage technologies. However, key considerations related to EV battery chemistry and repurposing processes will dictate how techno-economically feasible it will be to develop and deploy these technologies at commercial-scale and how competitive they will be compared to incumbent first-life Li-ion battery energy storage systems (BESS).
Influence of EV battery chemistry on second-life batteries
EV Batteries, especially in Europe and the US, have predominantly adopted NMC chemistries in order to facilitate improved energy density and, thus, driving range. The inclusion of nickel and cobalt in the cathode improves the economics of recycling NMC batteries. IDTechEx predicts that in the long term, more NMC batteries will be sent to recycling to recover these valuable and critical raw materials, which will be reintroduced into new EV battery manufacturing. As per the EU Battery Regulation, this will also be important for OEMs looking to meet minimum recycled material contents targets in new EV batteries.
Conversely, however, LFP EV batteries are less economically feasible to recycle due to the absence of cobalt and nickel in the cathode. Therefore, IDTechEx expects more LFP EV batteries to initially be sent to repurposing for second-life battery applications. However, historic LFP EV battery adoption in European and US markets has not been as prevalent as in Chinese markets. Therefore, this may result in slower short-term second-life battery market growth in Europe and the US, at least until the availability of LFP EV batteries increases. IDTechEx’s new market report provides further analysis and discussion on NMC vs LFP for recycling and repurposing, as well as forecasts for LFP EV battery availability by type of EV in key regions, including Europe, the US, and China, as well as forecasting second-life BESS installations in these regions.
Cost bottlenecks in second-life battery repurposing
Repurposers in Europe and the US, such as B2U Storage Solutions, BeePlanet Factory, Connected Energy, Zenobē, and Smartville, have continued to develop and steadily supply second-life BESS technologies, predominantly in these regions. Many factors contribute to the overall cost of second-life battery repurposing, including logistics costs, materials and components, and the need for manual intervention in the repurposing process, which includes manual inspection, testing or grading, and end-of-life (EOL) EV battery disassembly and reassembly.
Within these key process steps, IDTechEx has identified several key bottlenecks that contribute significantly to overall repurposing costs. These include the cost of the retired EV battery and testing or grading. Logistics costs are also not to be underestimated. Since EOL batteries are typically shipped in low volumes and over long distances in the current market, logistics can form a significant proportion of overall repurposing cost.
Processes and materials contributing to overall repurposing costs and identified bottlenecks. Source: IDTechEx
IDTechEx expects EOL EV battery costs to reduce over the coming years due to the emergence of business-to-business (B2B) battery marketplaces. These marketplaces will facilitate a more efficient flow of EOL batteries between automotive OEMs and repurposers, as well as potentially provide key EOL battery State-of-Health (SOH) information, which will expedite repurposers’ decision-making. Marketplace providers may also store these batteries in inventory for an OEM, potentially removing part of the cost burden of storing EOL batteries for the OEM. Marketplaces may charge OEMs to use their platform and/or receive payment on a commission basis from sales of EOL batteries.
In some cases, marketplaces are already offering retired EV batteries at costs between US$25-75/kWh, albeit at relatively low volumes. Overall, improved efficiencies of trading greater volumes of EOL batteries to repurposers (i.e., improved economies of scale) will see retired EV battery costs reduce, on average, on a $/kWh basis. This will be key for repurposers looking to offer second-life BESS technologies at prices which are more competitive with mature first-life Li-ion BESS technologies. IDTechEx’s market report analyses costs in the repurposing process informed by primary interviews with key players, discusses further cost bottlenecks in the second-life battery repurposing process, provides sensitivity analysis in different repurposing scenarios, and routes for cost reduction.
Competition against first-life li-ion BESS and future outlook
Second-life BESS technologies will generally perform worse than first-life Li-ion BESS technologies. This is due to the EV batteries’ degradation over first-life in an EV. Therefore, these systems have to be priced at costs lower than first-life Li-ion BESS to be a more competitive energy storage technology for customers. The reduction of first-life Li-ion BESS technologies in the last few years has made it increasingly difficult for repurposers to commercialize and develop their second-life BESS technologies. This has led to only steady second-life battery market growth in recent years.
It will be key for repurposers to explore opportunities to reduce repurposing costs on all fronts, including logistics, materials, components, and the repurposing process itself. Although alternative business models could also be adopted to make second-life BESS technologies more attractive for customers, including Battery Storage as a Service (BSaaS) or renting batteries to customers. These business models are discussed by IDTechEx in their new market report. Ultimately, the growing availability of retired LFP EV batteries in Europe and the US should help to facilitate lower retired EV battery costs, allowing repurposers to offer their second-life batteries at lower costs to customers. However, the long-term commercial feasibility of second-life battery storage technologies also depends on the cost of first-life Li-ion BESS; which continues to decrease and is yet to reach a floor.
For more detailed information on second-life electric vehicle batteries, please see the IDTechEx report, “Second-life Electric Vehicle Batteries 2025-2035: Markets, Forecasts, Players, and Technologies”:
- Repurposing processes
- Techno-economic analyses against first-life Li-ion BESS
- Business models
- Revenue streams, applications
- Regulations
- EV battery and second-life battery trends
- Key second-life battery players and markets
- EOL battery testing and grading technologies and players
- Access to 30+ company profiles
- 10-year market forecasts for second-life batteries and retired EV battery availability
