Growth in the electric vehicle industry has led automakers to ask: what happens to old battery packs? We break down how second-life batteries work, who is investing, and how the space affects EV makers and utility companies.
The electric vehicle (EV) sector is poised for rapid growth. About 145M EVs are expected to be on the road by the end of the decade — more than 10x the number in 2020. This means that hundreds of millions of battery packs could be retiring annually by 2040.
But these battery packs still retain a significant amount of their initial charge capacity when they reach the end of their lives. Rather than sending them to a landfill or going through the laborious and expensive process of recycling, the battery packs can find a “second life” being repurposed for power grid storage.
The opportunity is massive. Annual investments in battery tech will reach approximately $100B by 2040, according to Bloomberg New Energy Finance — with the majority of this going to grid storage batteries.
Second-life battery tech is positioned to have a profound impact on the future of electric vehicles and the power grid. Below, we address the following questions:
- What are second-life batteries?
- How is second-life battery tech growing? Who are the key players?
- What do EV automakers and utility companies need to consider for adoption? How do they benefit?
- What’s next?
What are second-life batteries?
EVs contain hundreds or even thousands of individual battery cells that together make up the vehicle’s battery pack. Over time, the battery pack loses its ability to hold a charge. An everyday example would be the diminished length of time a smartphone can last on a single charge after a few years of use.
To help ease consumer concerns about this degradation, EV makers tend to offer a warranty period on their battery packs — typically up to 8-10 years or 100,000 miles — that covers a replacement if the battery charge drops below a certain percentage of its initial charge.
However, when EV battery packs reach their “end of life” (EOL), such as due to a warranty replacement or the retiring of the EV, they can generally still hold a significant amount of a charge. In fact, many of the battery cells in a used battery pack are suitable for a “second life” of 5-7 years as grid storage.