Fair Market Valuation of Electric Vehicle Batteries in Second Life Applications

Amadeus Bach, Simona Onori, Stefan J. Reichelstein and Jihan Zhuang
Additional contact information
Amadeus Bach: U of Mannheim
Simona Onori: Stanford U
Stefan J. Reichelstein: U of Mannheim and Stanford U
Jihan Zhuang: Stanford U

Research Papers from Stanford University, Graduate School of Business

Abstract: The rapidly growing number of lithium-ion battery packs deployed in electric vehicles (EVs) entails enormous economic potential for used EV batteries to be redeployed in a second life application, e.g., for behind-the-meter stationary energy storage. To examine this potential, we develop a generic economic valuation model for used capacity assets in which second life usage requires repurposing costs and delays the receipt of recycling payoffs. Our model estimates point to a robust economic case for repurposing battery packs with iron-based cathodes (LFP batteries). Specifically, we project that the fair market value of LFP batteries exiting from electric vehicles generally exceeds 40% of the market value of a new battery. The value retention shares of used LFP packs are substantially higher in the U.S. market than in China, owing to the fact that new batteries are traded at higher market prices in the U.S. In contrast, our findings point only to a marginal economic case for repurposing batteries with nickel-cobalt-based cathodes (NCX batteries) in the context of the U.S. market. This finding reflects the relatively large recycling payoffs available from nickel and cobalt as well as the relatively short life cycle of NCX cathodes. For the Chinese market, we obtain the unambiguous conclusion that owners of NCX batteries are better off not incurring the requisite repurposing costs but instead immediately collecting the available recycling payoff.

Date: 2024-08
New Economics Papers: this item is included in nep-cna, nep-ene, nep-env, nep-inv and nep-tre
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.gsb.stanford.edu/faculty-research/work ... atteries-second-life

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecl:stabus:4203

Access Statistics for this paper

More papers in Research Papers from Stanford University, Graduate School of Business Contact information at EDIRC.
Bibliographic data for series maintained by ().