Why Tesla Backs Recycling, Not Reuse, for Retired Electric Vehicle Batteries

Reusing batteries from plug-in electric vehicles for home energy storage is a concept that has gained traction in recent years, but does it make economic sense?

A study from Lux Research says no.

Recycling, not reuse, is likely to be the more attractive option for up to 65 GWh of second-life batteries poised to enter the market in 2035 with the retirement of the first generation of plug-in vehicles, according to Reuse or Recycle: The Billion-Dollar Battery Question.

Reuse of batteries from electric vehicles will deliver questionable returns on account of reduced performance, limiting them to application with less frequent and shallower depth of discharge cycles, it says.

While automakers are choosing a wide array of applications for reuse of batteries, Tesla backs recycling, the report says. BMW and Nissan are commercializing residential storage products, while Daimler has started operating a large 13 MWh system. Tesla, on the other hand, pursues recycling as its NCA cathodes are not suitable for most stationary storage needs.

Tesla continues to invest in energy storage, however, following its recently approved $2.6 billion merger with SolarCity.

Lux Research says an oversized 11.2 kWh residential system from second-life batteries will cost just over $4,600, compared with nearly $6,000 for a new 7 kWh system. However, reduced round-trip efficiency and cycle life make residential units and other daily cycling applications a poor fit compared to some others.

“With present technology, recycling old batteries for new materials is the more economical option for creating the most value from existing materials,” said Christopher Robinson, Lux Research associate and lead author of the report. “That said, innovations in areas like packaging and testing could tip the balance in the future, so companies should have plans for both recycling and reuse.”

The report finds recycling technologies are varied. Of all the recycling technologies, pyrometallurgical processing, or smelting, is the most mature and can recover key metallic elements. Mechanical processing can recover valuable cathode materials directly, and hydrometallurgical processing can be lower cost.

Similarly, reuse options are limited. Second-life batteries offer only limited cost savings, especially as new cell prices continue to fall. Still, with more efficient testing, sorting, and repackaging, second-life systems could be made more competitive for applications like demand response and backup power.