The biggest threat to second life is second life
In our latest report on the end-of-life market for lithium-ion batteries we concluded that second use will be the first option when battery packs in electric vehicles have reached the end of life in their first application.
Essentially because many batteries still have sufficient capacity and match a growing demand in the markets for energy storage, back-up and EV-charging.
Still there is a lot of hesitation in the market. And that hesitation might be what defines the future market not only for second-life batteries but for energy storage applications as a whole.
While the jury is out discussing wether second life will happen or not there is one country that have to take care end-of-life batteries sooner than any other. And the scale of the problem – or the opportunity – is several times larger than for the rest of the world combined.
That country is of course China. Which also is home to the world’s leading battery manufacturers.
From the first of August this year, Chinese automotive companies must take care of the batteries they have placed on the market. And the first option, both according to the law, and due to pure economics, will be to put either full or disassembled packs in second life applications.
The market, or more correct markets, for these applications are growing rapidly. Utility-scale and industrial energy storage, back-up for telecom towers, and utility vehicles are some examples in China which increasingly are using second life batteries.
But there is nothing that says that the batteries have to stay in China. And with rapidly growing demand for energy storage systems in countries such as USA, Australia, Germany and UK it is becoming more and more attractive to address these markets.
This is good news for energy storage players in Europe and North America. An increased supply of batteries is highly welcomed when the demand for cells and packs from car and bus makers is soaring.
For companies that hesitates about getting involved in second life it might be more troublesome. Because now the competition is not limited to new expensive batteries, but similar low cost batteries assembled and optimized by companies that benefit from both lower costs and an ecosystem of technology and expertise. Increasingly with circular solutions involving take back and recycling.
It is important to understand that there is really no market for second-life batteries. There are markets for energy storage, back-up power, EV-charging etc. Second-life batteries will serve some segments in these markets. And, like in any market, eventually there will only be a few players dominating these segments.
With a large number of companies that need to turn problems into opportunities, with significant supply of product to trade, the strategy to claim a position in such a segment is not hesitation but full speed ahead.