Giving electric vehicle batteries a second life could solve serious issues with falling vehicle residual values (RVs), according to one firm.

Giving former EV batteries a second life as energy storage could substantially improve RVs for EVs

Connected Energy, a specialist in battery energy storage systems (BESS), has responded to a report from the BVRLA of a “storm warning” for electric vehicle RVs and said that repurposing batteries at vehicle end of life could help to solve the problem.

“Giving former EV batteries a second life as energy storage can unlock additional value,” said Alex Charr, chief operating officer, Connected Energy. “New commercial models are now emerging to enable financial returns for EV battery owners. This could substantially improve residual values for EVs and accelerate the transition to all-electric vehicles.”

Latest BVRLA figures indicate that used EV prices have fallen 60% since 2022, negatively impacting the vehicle leasing business model. So far, leasing firms have been able to weather the impact of this by offsetting the disposal losses with the proceeds of healthy prices for end-of-contract petrol and diesel vehicles. They’ve also developed second-life leasing products targeted at SMEs, salary sacrifice customers and private drivers, mitigating depreciation over a longer period in the hope that the used EV market picks up.

But without buoyant retail demand for new EVs, leasing companies are deeply worried about the future values of used EVs.

However, Connected Energy said it has proved that EV batteries can have a successful second life in stationary energy storage systems.

When an EV reaches the end of its life, the batteries still retain up to 80% of their original energy storage capabilities. Repurposing them for stationary energy storage can create significant value. Applications include battery energy storage systems to support EV charging hubs and microgrids or capturing excess solar for decarbonisation goals.

“Based on our data, the revenue generated via second-life applications is significant – potentially thousands of euros per unit – a huge boost to the residual value of an EV,” elaborated Charr. “For OEMs, it also improves the carbon footprint of an EV because reusing existing batteries for energy storage applications reduces the need to produce new batteries.”

Second life also solves the current issue of having to pay for battery recycling. Recycling lithium-ion batteries remains a costly and energy-intensive process, with a negative scrap value averaging hundreds of euros per pack in Europe.

“By extending battery lifespans, we reduce the immediate need for recycling, giving the industry time to mature and costs to come down,” said Charr. “Of course, once the recycling industry matures to the point where it is paying for battery packs, this becomes an additional cost benefit after second life.”

Charr said that Connected Energy had already proved the BESS concept works.

“Through our E-Stor systems and collaborations with automotive leaders, we’ve demonstrated the potential of second-life batteries in a variety of applications. And based on our data, we now know that the same principles apply at scale, enabling large scale opportunities for energy storage developments which support the grid on a network level.

“By monetising second-life batteries, leasing companies and OEMs can introduce an additional revenue stream, directly boosting the intrinsic value of a used EV. This not only addresses the issue of falling RVs but also enhances the overall sustainability of the global EV industry.”