Asad Hussain | Partner

The Untapped Potential of Reusing EV Batteries

This article was originally published on May 25, 2023. Written by Asad Hussain, Cassidy Shell, and Shweta (Shay) Natarajan. All authors have equal contributions and are listed alphabetically by first name.


The rapid growth of electric vehicle (EV) adoption has intensified the need for sustainable and circular end-of-life pathways for batteries. While the current paradigm of battery circularity primarily emphasizes recycling, it is becoming increasingly apparent that expanding the definition to incorporate reuse will be essential for achieving decarbonization, fostering equity, and stimulating economic growth.

EV batteries repurposed for energy storage | Source: Renault

Defining Battery Reuse

Battery reuse refers to the process of repurposing EV batteries that have reached the end of their initial service life in vehicles, but still retain a significant amount of capacity for other applications. As the capacity of these batteries degrades over time, they may no longer provide optimal performance for electric vehicles; however, they can still be utilized in various second-life applications, such as stationary energy storage systems, light electric vehicles in emerging markets, and reduced-range EVs.

Despite the potential benefits of battery reuse, stakeholders in the electric vehicle industry have primarily focused on recycling as the primary end-of-life solution for batteries. This emphasis on recycling often overshadows the opportunities offered by repurposing and reusing batteries in various second-life applications, which can contribute to both environmental and economic advantages.

Lifetime earnings from reusing and recycling EV batteries versus baseline earnings | Source: MIP analysis

Economic Benefits of Battery Reuse

Through our multisectoral collaboration efforts, we have established a paradigm for battery lifecycle management that maximizes lifetime earnings by minimizing battery modifications and optimizing battery utilization. Our findings reveal that reusing batteries (followed by eventual recycling) can lead to significantly higher lifetime earnings than those of batteries that are not reused or recycled, demonstrating the economic potential of embracing battery reuse.

By lowering the barriers to entry and making electric mobility more inclusive, reuse can foster broader adoption of sustainable transportation solutions, thereby promoting social equity and fostering economic growth.

Improved residual value prediction and capture would enable original equipment manufacturers (OEMs) or leasing companies to reduce the lease prices of EVs. This, in turn, would further accelerate EV adoption while making electric vehicles more accessible to low and middle-income consumers who might otherwise find them to be cost-prohibitive.

Executing this strategy is complex, involving analytics, remanufacturing, global distribution and tracking, and certified recycling, challenges that are often beyond the scope of even the most prominent automotive manufacturers. This has catalyzed the development of battery lifecycle management companies that facilitate this process for automotive companies and customers. “Our objective is to provide cradle-to-grave support for car companies to optimize the full lifetime value of EVs and to ensure responsible and safe recycling of all resources,” says Guillermo Garcia of Samsar Resources.

Cobalt mine | Source: The Carter Center

Environmental, Social, and Governance (ESG) and Equity Benefits of Battery Reuse

Reusing batteries can reduce the overall carbon footprint associated with battery production by spreading the carbon emissions of production over a longer life, thus reducing system-level carbon intensity. Incorporating second-use batteries into the overall battery demand can significantly offset new battery production, avoiding approximately 73 CO2 eq./kWh in emissions and contributing to decarbonization goals.

Extracting value from second-use batteries can lower the upfront cost of electrification for second adopters of electric vehicles and price-sensitive customers of battery systems, promoting more equitable access to electric mobility solutions and energy storage solutions.

Case Study: The Tire Industry

The tire recycling industry is an example of how reuse can offer a more viable circular pathway compared with recycling alone, by extending the life of used tires and reducing waste. Historically, the tire industry has faced challenges in waste reduction due to the sheer volume of discarded tires and the limited recycling options available. Annually, an estimated 1 to 1.8 billion used tires are discarded globally. Retreading, which involves refurbishing used tires by applying a new tread, effectively extends their life and reduces the need to manufacture new tires. Retreading has proved particularly successful for high-mileage vehicles used in commercial fleets. Retreading a commercial tire necessitates only seven gallons of oil, compared to the 22 gallons required to produce a new tire.

Like tires, electric vehicle batteries are composed of various materials, making their recycling complex and costly. This highlights the importance of developing a closed-loop recycling process for electric vehicle batteries that fits within a circular economy framework and emphasizes the significance of reuse.

Required percentage of recycled lithium content in European EV batteries | Source: MIP analysis

Policy Recommendations for Encouraging Battery Reuse

Policymakers must recognize that fostering a circular economy encompasses not only battery recycling but also battery reuse. To encourage greater reuse of batteries, we have outlined several policy recommendations to address potential challenges, such as liability exposure, that could deter ecosystem stakeholders from considering this option.

Policymakers should work closely with the private sector to develop standards and laws that absolve electric vehicle original equipment manufacturers (OEMs) of liability in reuse applications and enable low-cost battery reuse, which includes the right to repair, data sharing, and battery management system (BMS) communication standards.

Policymakers should consider relaxing and pushing out recycled content requirements. The EU has mandated recycling content standards that require a certain percentage of recycled materials to be used in the manufacturing of new batteries. Due to the limited availability of end-of-life lithium-ion batteries in the EU and the lack of recycling capacity to process them, the EU’s battery recycled content mandate risks creating an artificial scarcity of recycled battery minerals, incentivizing premature recycling of lithium-ion batteries, which would discourage battery reuse.

Policymakers should invest in and encourage the development of fast, widespread, and affordable battery health testing to help consumers and organizations make informed decisions about the viability of batteries for second-life applications.

Policymakers should also institute fire safety training and knowledge-sharing to improve suppression response to lithium-ion battery fires and prevent fires before they occur, ensuring the safe and responsible handling of reused batteries.

Recommendations for OEMs

As the EV market continues to grow, original equipment manufacturers (OEMs) must play a vital role in promoting a more sustainable and circular approach to battery usage. By focusing on modularity and data sharing, OEMs can unlock a vast reuse market and pave the way for more affordable EVs.

OEMs should consider designing for modularity, which unlocks an enormous second-use market. Most EV batteries currently on the road or in production lack modularity and are challenging to dismantle & repurpose profitably. For example, although Tesla battery cells are highly amenable to battery repurposing, Tesla battery packs cannot be broken down into modules or cells because their cells are suspended in hard glue. This practically eliminates the market for significant second-use applications such as electric 2 & 3-wheelers. However, certain modular battery designs would unlock access to a large electric 2 & 3-wheeler battery second-use market. In addition, modularity would allow for individual modules or cells to be replaced or serviced, reducing service and repair costs, improving safety, prolonging battery life, and increasing flexibility in choosing second-use applications. We note that our focus is on battery modularity, which focuses on replaceable cells or modules within a single OEM’s product line, rather than standardization across OEMs, which we acknowledge is an unrealistic expectation.

OEMs should prioritize sharing battery data with other market participants to reduce ecosystem costs in the battery reuse market. Accurate data on battery health, safety, and range/cycles is crucial for evaluating remaining capacity and suitability for second and third-use applications and is a critical enabler for the entire ecosystem to capture the full residual value of the battery. Developing advanced monitoring and analytics tools is essential for predicting battery performance, preventing potential accidents, and ensuring timely replacements. Unfortunately, many OEMs have been reluctant to share battery data, increasing the friction for second-use battery applications. Encouraging data sharing not only promotes safety and efficiency but also facilitates collaboration between OEMs and repurposers. Achieving “perfect data sharing” would enable full residual value capture across the market, making the vehicles more attractive to the OEM’s customers and paving the way for more affordable EVs and a more efficient market.

Battery manufacturing plant | Source: Reuters


Policymakers and industry stakeholders must broaden their perspective on circularity by incorporating battery reuse as a fundamental aspect of their approach. Adopting battery reuse as a key element in a truly circular economy is crucial for accomplishing decarbonization, promoting equity, and boosting economic growth. By acknowledging the significance of battery reuse and implementing well-rounded policies and strategies that foster its advancement, both policymakers and industry stakeholders can collaboratively steer the automotive industry toward a more sustainable future, yielding significant economic and environmental benefits.

About the Authors

Asad Hussain is the Partner of Research at MIP. Asad previously led PitchBook’s research coverage of the mobility sector, and his research has been featured in several premier media outlets.

Cassidy Shell is a Senior Associate of Strategy & Research at MIP. Cassidy was previously a Senior Associate at the Cleantech Group, where she focused on mobility and sustainability research.

Shweta (Shay) Natarajan is the Partner of Strategy at MIP. Shay has previously held strategy leadership roles at Caterpillar, McKinsey & Co., and Apple.

All authors have equal contributions and are listed alphabetically by first name.

MIP is a collaborative strategic investment firm that brings together the leading stakeholders in the mobility ecosystem — auto companies, parts suppliers, energy companies, fleet operators, logistics providers, technology and communications companies, financial and insurance companies, as well as cities and municipalities — to identify common challenges, find solutions, invest in those solutions, and then scale those innovations across the market.

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