Prices for used batteries are higher than for new batteries

And this is why

In the latest assessment of EV battery prices by Bloomberg New Energy Finance in December last year the price per kWh fell below $100 on pack level for the first time. The particular price was for LFP batteries used in Chinese electric buses. When adjusted for volume the reported price was $105/kWh and on average the reported price for all kinds of EV batteries, in all markets, was $137 per kWh.

That is still very low and an extraordinary price drop of 89% since 2010.

With prices for new EV batteries at these levels common sense would suggest that prices for used batteries would be significantly lower. That is however not the case.

In our first assessment of prices for used batteries outside of China the average price per kWh for EV batteries (both BEV and PHEV) is $220, more than 60% higher than Bloomberg’s average.

How is this possible? And if that’s the case, is at all sustainable over time?

To explain this we need to address two important aspects: The nature of the market for reused batteries and the dynamics of pricing of used batteries. Obviously a look at our methodology is of equal importance.

What almost has become a school book explanation of second use of EV batteries is that they will be removed from the vehicles when they have reached 80% of their capacity, and then assessed for use in new applications such as stationary energy storage. However, this is not how batteries end their first life. In fact the explanation has almost no foundation in real life at all.

There are three different ways EV batteries can become available for reuse.

The first is if the battery fails when it’s still warranted by the car maker. In this case the battery can be repaired but also deemed for remanufacturing or reuse. Many times a remanufacturing process yield battery modules which are not good enough for reuse in a car but which can be reused in other applications.

The second route is when a car is involved in an accident and the insurance company chose to write off the vehicle and sell it to an authorised treatment facility, an ATF. The ATF will assess the vehicle and might on some markets, under certain circumstances, repair the vehicle and put it on the road again but more often the wreck, with the battery, will be exported to countries with high demand for EVs and where repairs are cheaper. However, if the car is dismantled the ATF will seek out to sell the battery to the highest bidder. This is how most batteries become available for reuse today.

Data from “The lithium-ion battery lifecycle report 2021”

The third way is when a car maker offers an upgrade of the battery to the car owner, like for instance increasing the capacity from 20 to 40 kWh. This will generate battery packs, often in very good conditions which now can be used in other solutions.

The so often talked-about cases in Europe , in which EV batteries have been used in large and mid-sized energy storage systems, are most often using batteries which have become available through the first and third alternative. These batteries are priced in contracts between the owner, which usually is the OEM, and the user or refurbisher. These prices are not part of this assessment.

Batteries harvested from end-of-life vehicles are owned by the ATFs which essentially are free to sell them to who ever they like to. The first option is usually to sell the batteries back into the automotive market, as part of the main business for the ATFs, which’s revenue come from selling spare parts to workshops. For EV batteries this has however proven difficult as the batteries often are warrantied in 8 years and OEMs have not been particularly interested in sourcing spare batteries from the ATFs. Instead two new markets have emerged: The Do-It-Yourselfers and startups.

Hobbyists, which previously harvested 18650 cells from laptop batteries are now using modules from Tesla and Nissan Leaf to build residential energy storage, convert ICE cars and boats to electric or for use in their RVs. Several of them have become entrepreneurs turning their hobbies into businesses while also engineering firms around the world have seen the opportunity to offer the same products to enthusiasts that not necessarily want to build and develop them themselves. Around this community an eco system has been established with wholesalers and retailers catering to a rapidly growing market which so far is outnumbering the batteries that reach end of life.

During several years the second life market was dominated by the OEMs doing experiments and partly publicly funded projects with everything from test batteries to the batteries available from repairs and upgrades. Since then many of these projects run on completely commercial grounds, often with a vested interest from the OEMs.

However, as the total market for EVs now is rapidly increasing the amount of EOL batteries available from road accidents is taking over in size.

So why are hobbyists buying old batteries for $220/kWh when there are new batteries for less than $100?

First of all, not many buyers can get new batteries for $100/kWh. In fact a volume-weighted average price of $137/kWh, in a global market which so heavily is dominated by Tesla and Chinese vehicle makers, indicate that there are car makers which buy battery packs for far more than $200/kWh, still in large quantities. When the turn comes to the average DIY-er or even a startup the price is much higher, if somebody even pick up the phone. To pay $400/kWh for storage batteries is not unusual at all.

Secondly, and here is where our assessment comes in, used batteries are not treated and traded as equals.

As can be seen in the chart below the prices for used batteries vary widely. In our database today we list more than 300 advertised individual batteries and far more transactions of the same battery type, usually modules. In total we have prices for 88 different packs and modules in markets like the US, UK, Norway, Netherlands, Germany, France, Sweden and several Eastern European countries.

Average prices for EV battery packs and modules. Full data available for our subscribers

When we assess the battery prices we do two things. We search and catalogue prices on individual web sites and different trading platforms, both for ATFs and more universally accessible sites like Ebay. We use both advertised and final prices. We also talk to ATFs, second life companies and experts to verify prices on a general level. At this stage the data only covers batteries from light electric vehicles which come through ATFs in the largest Western markets and some emerging markets in Eastern Europe. Batteries sold directly from the OEMs or exported from China can be both cheaper and more expensive. The price per kWh referens to nameplate capacity of the simple reason that many batteries on the open market are not tested but sold “as is”.

In short one could say there are two type of prices. Advertised prices for battery packs which the ATFs hope to sell back to the automotive market when there is a need, and more market-based prices which changes with the balance of supply and demand on a more liquid market.

The highest prices for used batteries today exceeds $1,000/kWh. These are usually batteries from PHEV vehicles and behind every battery there may be several others of the same kind. The price has not so much to do with the ability to store energy but the battery is rather sold as a functional component, just like a charger or inverter. Some of these batteries will never be sold. In fact many PHEV batteries are the most likely to be sent to recycling although they could have been reused, only because there are no buyers. Not all PHEV’s have as generous warranties of their batteries like BEVs which opens up an opportunity as the cars come of age. Yet, the batteries aren’t as critical as in a full electric vehicle.

In the other end, below $100/kWh are BEV packs advertised with the same purpose as the PHEV batteries. The low price per kWh is just a consequence of their much bigger size. The BEVs which are found here are cars which are discontinued, have been sold in small numbers or cars which’s packs have been upgraded and which means there are better alternatives.

The “real” prices can be found in the middle. In fact there are only a few batteries for which it can be said there is a real global or even regional market. The leaders here are Tesla Model S/X, Nissan Leaf and to some extent batteries from Mitsubishi Outlander, BMW i3 and Chevrolet Volt. In particular Tesla Model S/X are traded at fairly consistent prices all over the world, exceeding the average price in most markets.

Essentially all Tesla and Nissan Leaf batteries are sold with the sole purpose to harvest the modules. Again the long warranties, and good access to batteries, limits the scope to sell the batteries back to auto market.

What’s very interesting is the development of the market for Tesla Model 3 packs and modules. In the US today there are more Model 3 which reach end of life than Model S, only because so many more Model 3 were sold the last three years, exceeding to total amount of Model S and X, while the accident rate for the vehicles stays the same. However the modules, which are much less flexible than the ones from Model S/X, haven’t really found its market yet.

Our data which is available on CES Online, shows that there are several opportunities in certain markets for startups in the reuse sector with many batteries which will come in high volumes but which aren’t really picked up by current market. The ability to consolidate and verify quality will become a key asset.

It also shows that as long as the batteries can be reused they most probably will be. The material values for the batteries are usually less than $20/kWh before any type of process, far from the worst fairing advertised battery at $59/kWh.

Still, a conclusion from our analysis is that the market for reused batteries is not an effective, liquid market. Besides for certain modules on the DIY market it can’t be compared to the market for new batteries. Much of this depends on the high rate of change and growth which means that the market will look very different in five years from now compared to today. It also shows that the differences in various geographical markets are huge, which often is a consequence of differences in availability but also of market maturity and preference. Finally there are also huge differences in how batteries are sold and at what stage in the value chain they are sold. In some cases batteries are graded and sold with a warranty. In many more cases they are sold directly by an ATF as is.

Taken together it is not really meaningful to talk about average prices for reused batteries. Not yet and certainly not on a global level. It all depends on the battery type, where it is available, who the buyer is and whether a market has been developed for it or not.

We look forward to serve our subscribers with more data on this extremely exciting market. If you are interested in getting access to our data, please check out our subscriptions options here.