EVs and Their Second-Use Market

The second-use market for EVs may develop very differently from the traditional used-car sector, with ageing batteries potentially holding greater value in energy storage than transport. This could reshape vehicle values, extend battery lifecycles and create new opportunities for recyclers as EV, energy and second-life battery markets become increasingly connected.

Cathal Murphy, Analyst with Mulhare Group, looks at how the second-use market for electric vehicles could develop very differently from the traditional used-car market. He considers whether ageing EV batteries may ultimately hold greater value in energy storage than in transport, and what that could mean for vehicle recyclers, consumers and the wider energy sector.

Major transitions in transport have never been sudden or completely linear. Canals were still hauling freight well into the era of rail. The last horse working for British Rail retired in 1967.

So we can judge any present-day energy transition in transport in the same manner. That there will not, in the near future, be a complete domination by a particular fuel. EVs, hybrid and fossil-fuel engines may all exist together on our roads. Mainly dictated by what becomes of the used EV market, and this, in turn, might be determined by the energy market as much as the car market.

Several factors drive this outcome. Primarily, in essence, the second-hand EV market may not replicate the current fossil fuel car market. This EV market may develop in ways car forecourts, the auto recycling industry, or the energy sector have not seen before. Price and quality guide any market, and the best use for a battery’s longest-lasting second life could be storage, not transport.

There will be more electricity generation required for increased electrification of transport and heat. Many countries will rely more on intermittent renewables for their electricity supply, such as wind and solar. This needs more electricity storage, both at grid scale and at the domestic and business levels as rooftop solar expands.

Consequently, this creates a new, broader battery market, and that market opens up many more uses for a second-hand EV. Battery storage, rather than battery for transport, could drive greater demand, higher value, and longer sustainable use.

Scale can be very versatile with EV batteries. With these second-use batteries, they can be combined in various quantities for the home or stacked bigger for the grid. Batteries may also have multiple uses.

We can start seeing ‘third-life’ or even ‘fourth-life’ energy storage, with EV batteries deployed in multiple different systems in their lifetime¹.

Compare the current battery prices to the cost of some second-hand EVs and, of course, the size of their batteries. Also compare the usable battery life for electricity storage against transport. Depending on its requirements, electricity storage can be less demanding on a second-use battery than meeting a car’s expected performance.

We are already seeing EV batteries reused for energy storage. There are many examples, such as the Amsterdam Arena in the Netherlands, using second-life Nissan LEAF batteries for storage from solar panels on the stadium roof and providing a backup power option in the event of a grid outage². So an electricity portfolio and energy policy in a country may then be the bigger factor in how we treat second-use EVs.

We must consider how the electricity grid could use the EV fleet, which in itself can be an immense battery storage resource. These can be aggregated and developed to balance the grid and support greater flexibility in the electricity market, while still functioning as an everyday EV. However, this could lead to further degradation of batteries and so will lessen their second use as car transport.

Another factor changing the second-hand EV market is that people may prefer to replace a car’s battery rather than trade it in for a newer model. This can extend an EV’s life considerably. After that, its resale value will be further limited, again limiting the second-hand market. These scenarios mean fewer second-hand EVs in a second-use market, but then is this a place for fossil fuels to fill?

A last consideration with a second-hand market is that people can stick with the familiar with such a purchase, and purchases are also dictated by lower cost, which fossil fuels will provide, as their could be limited second use EVs in the market.

Maybe then there will not be a large second-hand EV market, at least in the near decades ahead. Instead, two separate markets will work in tandem: mainly new EVs, and mainly fossil-fuel second-hand. This is a more mixed transport future, like we have seen with transport fuel in the past.

¹https://www.energy-storage.news/repurposing-ev-batteries-into-third-life-energy-storage-and-beyond/

²https://www.carya.eu/article.php?id=7051