Conference Paper

NREL/CP-540-48042

June 2010

NREL’s PHEV/EV Li-ion Battery 

Secondary-Use Project

J. Neubauer and A. Pesaran

Presented at the Advanced Automotive Batteries Conference 

(AABC) 2010

Orlando, Florida

May 17−21, 2010
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1

NREL’s PHEV/EV Li-Ion Battery 

Secondary-Use Project

Jeremy Neubauer

National Renewable Energy Laboratory

, Ahmad Pesaran

Accelerated development and market 

penetration of plug-in hybrid electric vehicles 

(PHEVs) and electric vehicles (EVs) is restricted 

at present by the high cost of lithium-ion (Liion) batteries. One way to address this problem 

is to recover a fraction of the battery’s cost via 

reuse in other applications after it is retired from 

service in the vehicle, when the battery may still 

have sufficient performance to meet the 

requirements of other energy storage 

applications.

In several current and emerging applications, the 

secondary use of PHEV and EV batteries may 

be beneficial. For example, the use of 

renewable solar and wind technologies to 

produce electricity is growing, and their 

increased market penetration requires energy 

storage to mitigate the intermittency of wind and 

solar energy. New trends in utility peak load 

reduction, energy efficiency, and load 

management also need energy storage. Smart 

grid, grid stabilization, low-energy buildings, 

and utility reliability require energy storage as 

well. However, neither the full scope of 

possible opportunities nor the feasibility or

profitability of such secondary-use battery 

opportunities have been accurately quantified.

With support from the Energy Storage activity 

of the U.S. Department of Energy’s Vehicle 

Technologies Program,, researchers at the 

National Renewable Energy Laboratory (NREL) 

are addressing this matter because of their

extensive expertise and capabilities in energy 

storage for transportation and in distributed 

grids, advanced vehicles, utilities, solar energy, 

wind energy, and grid interfaces, as well as their 

understanding of the dynamics of the 

stakeholders. This paper and poster introduces 

the motivation, objective, and plans of NREL’s 

PHEV/EV Li-ion Battery Secondary-Use 

project.

NREL’s mission includes developing 

technologies and practices to address the 

nation’s energy and environmental goals, and in 

particular, reducing the nation’s dependence on 

foreign oil and emissions of greenhouse gases. 

Increased market share of PHEVs and EVs 

addresses both of these goals by improving the 

overall fuel efficiency and reducing the 

emissions of light vehicles in the United States. 

Perhaps the largest impediment to the 

proliferation of such vehicles, however, is the 

prohibitively high cost of their Li-ion traction 

batteries. It has been estimated that a reduction 

of ~50% in battery costs is necessary to equalize 

the current economics of owning PHEVs and 

conventionally fueled vehicles [1].

Motivation

Several strategies are currently being pursued to 

address high Li-ion battery costs, such as the 

development of Li-ion chemistries based on less 

costly materials, more cost-efficient cell and 

battery designs and manufacturing techniques, 

etc. Many of these approaches are unlikely to 

yield a near-term cost reduction to the consumer 

sufficient to encourage increased PHEV/EV 

market share, though. For example, the oftendiscussed cost savings achievable via 

efficiencies of scale in mass production requires 

first an increased PHEV/EVs market share.

The idea of reusing PHEV/EV traction batteries 

in secondary-use applications following the end 

of their automotive service life could reduce the 

initial cost of these batteries today. The life

cycle of a battery utilized in such a manner is 

illustrated in Figure 1. By extracting additional 

services and revenue from the battery in a postvehicle application, we can increase the total 

lifetime value of the battery. This subject has 

been studied in the past in reference primarily to 

the nickel metal hydride batteries powering 

some hybrids [2, 3] and has recently seen 

renewed interest spurred by the coming

generation of Li-ion-based hybrids and EVs.

Most readily, the direct benefit of secondary use 

to the automotive customer is quantified as a 

battery resale value once the battery is no longer 

sufficient for automotive use. This approach 

may have only a minor impact on new car 

buyers, given the uncertainty of the batteries’ 

future resale value. However, via ownership of 
2

the battery by the automotive manufacturer or a 

third party willing to assume the risk inherent in 

such an endeavor, the battery’s automotive 

salvage value can be transformed into a 

substantial reduction in initial purchase price, 

and thus significantly impact current PHEV/EV 

adoption rates.

Figure 1: Lifetime of a PHEV/EV battery 

when second-use applications are considered 

to increase its total lifetime value

How much of a break in the current battery price

is possible from secondary-use applications? 

This precise calculation will be a major focus of 

NREL’s study, requiring detailed knowledge of 

the operating requirements of the selected 

secondary-use application, financial data for 

revenues and operating costs, battery 

refurbishment and distribution costs, etc. 

Nonetheless, a reasonable upper bound to the

initial price reduction can be made based upon

anticipated future Li-ion prices when the 

following assumptions are made:

• Profitable and willing secondary-use 

applications are available at the time of 

the battery’s automotive service 

retirement.

• The principle competitor for secondaryuse PHEV/EV batteries in the selected 

second-use application is newly 

produced PHEV/EV batteries.

Under those assumptions, the premise that 

demand will exist for used PHEV/EV batteries 

priced less than equally capable new PHEV/EV 

batteries is valid. Accordingly, it is reasonable 

to assume that the future salvage value of a used 

PHEV/EV battery will be proportional to the 

cost of an equally capable new battery, taking 

into consideration the health of the used battery, 

the cost of collecting, refurbishing, and 

certifying the used battery, and a “used” product 

discount factor. One means of capturing this 

relation is given in Equation 1:

Vsalvage = Kh *(1 - Kr - Ku) Cnew Eq (1)

where

Vsalvage = future salvage value of used battery, $

Cnew = forecasted future new battery cost, $

Kh = forecasted battery health, %

Kr = relative cost of refurbishment, %

Ku = used product discount, %.

The net present value (NPV) of the salvaged 

battery, which can be applied to the initial 

purchase price reduction, can then be readily 

calculated by Equation 2:

NPVsalvage =Vsalvage*(1-r)n Eq (2)

where

NP Vsalvage = NPV of used battery, $

r = annual discount rate, %

n = automotive service life, years.

Note that this approach requires two not-soeasily-attained bits of information: the future 
3

cost of Li-ion batteries and the state of health of 

the used battery at the time of automotive 

service retirement. However, reasonable 

estimates for these values (in the context of 

creating a best case salvage value estimate) can 

be had by combining conservative forecasts of

battery cost as a function of production quantity

[4] and PHEV sales forecast [5] with a simple 

model for battery degradation defining end of 

automotive service at 10 years and 70% of initial 

battery health. Then, assuming Kr=15%, 

Ku=15%, and r=2.5%, a best case initial battery 

price reduction of 28% can be calculated, per 

Figure 2.

Figure 2: Best case estimate of the net 

present salvage value of PHEV/EV Li-ion 

batteries retired from automotive service

Regardless of the specific values applied to these 

equations, two worthwhile generalizations can 

be made to help guide more detailed secondaryuse studies: 

• Decreasing Cnew in the future (as well as 

general improvements in battery 

performance) will negatively affect 

future battery salvage values and thus 

reduce the initial price discount 

achievable today.

• Replacing an automotive battery will 

always come with an increased cost to 

the vehicle owner (Cnew is always greater 

than Vsalvage). Combined with 

exponential decay rates for Cnew and 

battery health, annualized automotive 

costs are minimized at maximum 

possible n, despite the fact that Vsalvage

decreases with time.

Given that secondary use appears to have the 

potential to significantly impact the initial 

battery cost, and thus the adoption rate, of 

PHEV/EVs, NREL’s objective for this project 

is, broadly, to identify, assess, and verify 

favorable secondary-use applications and 

strategies for PHEV/EV Li-ion traction batteries. 

Here “favorable applications and strategies” are 

defined as those that—

Objective

• Maximize the total lifetime value of the 

battery and thus imply the largest initial 

cost reduction

• Have a scale of implementation well 

matched to the size of the PHEV/EV 

market and thus a high capacity to affect 

PHEV/EV market share

• Have a high feasibility of 

implementation with respect to assumed 

risks, regulatory hurdles, technical 

hurdles, etc.

NREL is implementing a three-phase plan to 

achieve this objective: (1) assess the merit of 

secondary-use applications and strategies, (2) 

verify performance and economic projections, 

and (3) facilitate the implementation of 

secondary-use programs.

Plans

In the first phase, a broad set of secondary-use 

applications will be compiled and briefly 

assessed, from which four to five of the most 

promising applications will be down-selected. 

These applications will then go through a more 

rigorous analysis, in which all aspects of a 

battery’s life cycle will be addressed in search of 

an optimal use strategy. Completing this task 

will require detailed economic data for not only

the secondary-use application but also for 

battery maintenance and refurbishment 

activities. Forecasting battery performance 

throughout the entirety of its automotive and 

secondary-use service will also be critical. 

In phase two, the most favorable applications 

and use strategies identified in phase one will be 

verified in long term tests. These tests will 

ideally utilize field-aged, mass production 

PHEV/EV battery designs subjected to 

representative second-use application conditions 

in a controlled environment. 
4

Finally, phase three will address facilitating the 

implementation of the identified and verified 

secondary-use applications and strategies. 

NREL will go beyond merely disseminating 

study findings to providing validated tools and 

data to industry, as well as developing 

PHEV/EV battery design and manufacturing 

standards and proposing the necessary 

regulatory changes to encourage secondary 

battery use. 

As of April 2010, NREL is seeking 

organizations from industry and academia to 

help evaluate secondary-use applications for 

PHEV and EV Li-ion batteries. A Request for 

Proposal was planned for release to co-fund such 

subcontractors to analyze potential secondaryuse battery applications, secure aged Li-ion 

traction batteries from PHEVs and/or EVs, and 

perform representative long-term secondary-use 

testing on the batteries to verify predicted 

performance.

Moving Forward

[1] Brooker, A., et al., “Technology 

Improvement Pathways to Cost-Effective 

Vehicle Electrification,” presented at the SAE 

2010 World Congress, Detroit, MI, April 2010.

References

[2] Market Feasibility for Nickel Metal Hydride 

and Other Advanced Electric Vehicle Batteries 

in Selected Stationary Applications, EPRI, Palo 

Alto, CA, and SMUD, Sacramento, CA: 2000.

[3] Technical and Economic Feasibility of 

Applying Used EV Batteries in Stationary 

Applications, Sandia National Laboratories, 

Albuquerque, NM: 2002.

[4] Kamath, H., “Lithium Ion Batteries in Utility 

Applications,” Proceedings of the 27th

International Battery Seminar and Exhibit, Ft. 

Lauderdale, FL, March 2010.

[5] PHEV Market Introduction Study Final 

Report, Oak Ridge National Laboratory, Oak 

Ridge, TN: 2010.

Figure 4: A broad range of secondary-use 

applications will be considered with respect to 

value, PHEV/EV market share impact, and 

feasibility

Figure 5: All aspects of a battery’s full life

cycle will be addressed when optimizing use 

strategies
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NREL's PHEV/EV Li-ion Battery Secondary-Use Project

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J. Neubauer and A. Pesaran

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NREL/CP-540-48042

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14. ABSTRACT (Maximum 200 Words)

Accelerated development and market penetration of plug-in hybrid electric vehicles (PHEVs) and electric vehicles 

(EVs) is restricted at present by the high cost of lithium-ion (Li-ion) batteries. One way to address this problem is to 

recover a fraction of the Li-ion battery’s cost via reuse in other applications after it is retired from service in the 

vehicle, when the battery may still have sufficient performance to meet the requirements of other energy storage 

applications.

15. SUBJECT TERMS

advanced batteries; lithium-ion batteries; plug-in hybrid electric vehicles; electric vehicles; battery secondary use

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