Electric-Vehicle Battery Reuse Is a Budding $5 Billion Opportunity

  • EV battery recycling gets a lot of hype, but that’s not the only option for depleted power packs.
  • Automakers are desperate for ways to repurpose batteries to reduce strain on the supply chain.
  • Opportunities are booming for companies that develop the best tech to reuse EV batteries.

Electric-vehicle battery recycling gets a lot of hype — and a lot of attention from Wall Street. But that’s not the only way to make sure EV batteries are a sustainable part of the auto industry’s supply chain going forward, and carmakers are desperate for tech that taps into that opportunity.

Auto companies are planning to build millions of EVs in the coming years, which means millions of batteries with precious materials, including lithium and nickel. Recycling is one way to keep anything from going to waste — but it’s not the only option to recover materials as the industry electrifies.

“It’s great that they’re not ending up in a landfill, but at the same time, they have more service in them,” said Steve Christensen, the executive director of the Responsible Battery Coalition. “Refurbishment is a somewhat forgotten market.”

That’s because even after they can no longer propel a car at highway speeds, batteries have about 80% of their capacity left, by McKinsey’s estimate. That’s plenty for uses such as energy storage, which could allow the grid to take on more renewable energy.

Some 1.7 million EV batteries will hit the reusability point in 2030, with a combined value of $5.1 billion, Circular Energy Research and Consulting said.

No wonder then that companies such as Nuvation Energy, Spiers New Technologies, Connected Energy, and Enel X are flooding into this space.

Reduce, reuse, but don’t recycle

Firms such as Redwood Materials and Li-Cycle have been innovating ways of battery recycling.

Taking that work further opens a door for startups that develop tech that leverages batteries with some life left.

Several used batteries can be repurposed together by combining parts of their packs based on their level of remaining energy, Enel X said. Batteries can also be refurbished, where they are taken apart and individual cells are used in new modules.

This could be one part of the solution to a looming critical-metals shortage.

“That will keep it out of being recycled just yet, which creates less of a strain on the material and manufacturing supply,” Christensen said. If spent batteries are being reused in some capacity for nonautomotive applications, that reduces the demand for and cost of brand-new battery metals. Plus, reuse would cut how beholden the industry is to China for new resources.

Getting proactive

While carmakers are announcing more battery capacity, new manufacturing plants, and other plans in support of their gargantuan EV goals, reuse is a critical part of that equation to solve — ahead of time.

That’s an opportunity for quick-moving startups and entrepreneurs keen to tap into this early on.

“There needs to be discussion about what’s being done on the front end from an environmental and a sustainability point of view, and what’s going on at end-of-life through second use or recyclability,” said Martin French, a managing director at Berrylls Strategy Advisors.

It’s important to develop these technologies now, experts say, even if EVs (and their batteries) are on the roads for some time. Establishing the capacity needed to sit through, process, and ultimately reuse batteries takes time and effort.

The key to success

Batteries also need to be built so that they can be both recycled and reused when the time comes. This means they need to be made in such a way that allows companies to either be able to pull the valuable materials out from them or leverage the energy left in them for a second life.

“One challenge is the cost of repurposing and reusing batteries, because there’s cost and time involved in trying to take it apart,” said Guidehouse Insights’ Maria Chavez.

That signals a third potential area for startups to crack: improvements in battery-cell architecture.

“During the first life of manufacturing the battery,” Chavez said, “it would really be helpful to manufacture that with the intent to repurpose or recycle later.”