Why Used Electric Car Batteries Will Soon Be in High Demand

July 27, 2018

From smartphones to electric vehicles, many of today’s most innovative products depend on lithium-ion batteries to function. That’s why every year the tech industry upgrades these portable power sources to hold more and more charge. While this allows them to create better products (at least in theory), it also leads companies to discard a lot of technically obsolete batteries that can still collect energy. For instance, the lithium-ion units that power cars and buses can be used for another seven to 10 years after leaving the road.

Analysts estimate that companies will have 55,000 of these batteries on their hands by the end of the year. But that’s nothing compared to what they’re expecting in 2025. By then, the increasing popularity of electric cars could lead to global stockpiles of approximately 3.4 million obsolete batteries. Instead of ending up in landfills, though, many companies plan to continue using them as power sources. Along with providing a cheap source of energy, old batteries could also become a lucrative second revenue stream for electric automakers as they resell the power sources to new customers. “The car manufacturers have an upcoming problem, and one that we are already starting to see: this massive volume of batteries,” said Johan Stjernberg, CEO of a Swedish energy company. “The market will be enormous for second-life applications with storage.”

In August, China will implement new rules that force carmakers to take responsibility for any obsolete batteries, thus keeping them out of landfills. The European Union already has similar plans in place, and industry experts expect the U.S. to follow suit as well. As for the electric vehicle market, analysts say that they will account for half of new-car sales by 2040. A decade after that, companies will have invested more than half a trillion dollars in “home, industrial and grid-scale battery storage.”

Questions:

  1. How will old lithium-ion batteries provide automakers with a second revenue stream?
  2. Why do you think experts expect electric cars to become so popular in the coming years?

Source: David Stringer and Jie Ma, “Where 3 Million Electric Vehicle Batteries Will Go When They Retire,” Bloomberg BusinessWeek, June 27, 2018. Photo by Surian Soosay.

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