
Residual Value: Electric Batteries vs. Internal Combustion Engine Vehicles - hunglee2
https://ark-invest.com/research/ev-batteries-value
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URSpider94
This is a terrible analysis. First of all, it assumes that the cost of a kWh
of battery remains at today's high value. If battery costs are falling rapidly
(and they are), then the value of a used battery pack will be driven down as
inexpensive new packs come on the market. Second, it ignores the fact that
10-year-old packs will have a substantially higher rate of catastrophic
failure than new packs, and if reliability is paramount then a used pack that
is closer to failure won't have that much value. Third, the fact that every
car brand uses very different pack designs means that it would be a nightmare
to design some kind of heterogeneous power storage system made up of batteries
from Leafs, Bolts, Fiats, Teslas, i3's, etc.

The current situation is that EV resale prices for everything but Teslas are
plunging like a rock. Three year old Fiat 500e's are selling at auction for
$4k, which is already less than the author's purported resale value of their
batteries at 10 years.

~~~
greglindahl
Where does the author give a battery resale value for the Fiat 500e? Since it
has a small battery, it degrades much faster per mile than a large battery.

~~~
gcb0
it weights 1/3 of tesla so it degrades 3x slower

~~~
_ph_
What has the weight of the battery to do with degradation speed? It is the
cycle count which determines battery aging, and for the same distance driven,
a Tesla has far fewer battery cycles than a smaller vehicle. The energy
consumption of a Tesla is higher than that of smaller vehicles, but by a
surprisingly small amount, as kinetic energy can be (partially) recovered. At
highway speeds, a Tesla even sometimes consumes less energy than some smaller
EV due to its better aerodynamics.

~~~
gcb0
weight of vehicle.

battery degradation is proportional to energy x time. if you need 3x more to
push all that weight, is it is dead 3x earlier.

it's just like how you waste breaks 3x faster breaking a cayenne instead of a
sedan.

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intrasight
I am of the opinion that the EV market is going to be held back until we have
standard battery packs of known price, quality, and warranty. There's no good
reason that this can't be taken on by some standards body. ANSI? Milspec?
Please, somebody!

~~~
tveita
It hasn't happened for mobiles or laptops, and I suspect similar reasons will
prevent it from happening for cars.

As long as battery life, size and weight are all important to the buyers,
manufacturers would rather put in the extra customization work to get a
competitive advantage.

~~~
intrasight
Capitalism depends first on competition and then on competitive advantage. We
need standards for modular power storage before we can have competition. Look
at the competition for standard PC PSUs. Super high-quality and low cost -
compared to proprietary power supplies.

Compete on quality (life, weight, cycles, etc) within the bounds of a modular
standard.

~~~
URSpider94
Read The Innovator's Dilemma. Standardization in fact usually comes later,
once the component in question has reached commodity status. Until then, if
there is a competitive advantage to be gained by customizing, then the market
leaders will make that investment to stay out in front. The leaders will
either fight or snub standardization.

Referring to the PC industry, the availability of standard components marked
the death of the premium desktop business, since these days anyone with two
hands and a screwdriver can bolt together a desktop as good as any other.
That's great for customers, not so good for incumbents like IBM.

~~~
intrasight
IBM realized years ago that there's little value (in their case negative
value) in being they guy with a screwdriver.

>The leaders will either fight or snub standardization.

I'll still claim that my PSU analogy applies. The leaders exist because of and
welcome the standards. Those that fight and snub will certainly not be
leaders.

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madengr
I was surprised there was only about 10% battery loss after 100k miles.

~~~
dovdovdov
You can google around, these batteries don't use full capacity, instead they
have a buffer that kicks in for failed/worn cells.

~~~
londons_explore
I'd like to see the behaviour near the end of life for these packs.

Packs in laptops seem to last 3 hours, 2 hours, 1 hour, then 5 minutes, 5
seconds, and "won't even switch on". I wonder if the car packs will have a
similar performance cliff.

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kristianp
Do the batteries retain so much of their value because energy density (J/kg)
of batteries hasn't improved for a long time? If a battery new tech comes out
that is sufficiently energy dense (and is mass produced), these old batteries
won't have much value except as scrap.

[https://www.technologyreview.com/s/602245/why-we-still-
dont-...](https://www.technologyreview.com/s/602245/why-we-still-dont-have-
better-batteries/)

~~~
Gibbon1
I re-read the article to be sure and here is that answer.

$15000 per 10 year old Tesla battery is the answer to the question, 'how much
would a 10 year old Tesla battery be worth to a utility if used to supply
peeking power?'

Ans: $15k

They get that number multiplying the going rate for peek power by the
remaining battery capacity over 16 years.

Year 1: 0.0385 MW/days X $100 X 365 days = $1405

Over a 16 year investment period adds up to $15k.

~~~
ratpolish
But the batteries don't have a capacity of 0.0385 MW-days. They have a
capacity of 0.0035 MW-days when brand new, or 0.0032 MW-days if degraded to
90% capacity. (It looks like they divided kilowatt-hours by 2 instead of 24 to
get kilowatt-days.) Not only that, but it looks like off-peak power is about
70% as expensive as peak power, so it'll cost $70 per MW-day to charge the
battery.

Year 1 (corrected): 0.0032 MW-days x ($100 - $70) x 365 days = $35.04

Edit: This assumes they're cycling the battery once per day. Presumably
there's only one period each day when they can sell at peak and one period
each day when they can buy at off-peak.

~~~
Gibbon1
You're making a wrong assumption about what is being bought. (you aren't
alone, everyone else in the thread is as well)

What's being purchased is 'standby reserve power per day 'not 'energy per day'

Digging it appears the promise being sold is. Will reserve of 2 hours of
peeking power for $100 per megawatt _per day_.

That's where the divide by 2 comes from. because what you are selling is the
ability to provide 2 hours of peeking power _if needed_. Not 24 hours worth.

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londons_explore
Typical lithium capacity-age chart:

[http://www.calce.umd.edu/batteries/pics/dcir.png](http://www.calce.umd.edu/batteries/pics/dcir.png)

I suspect many users will be happy with their car down to half the usual range
(ie. the 700 cycle mark). Even if the original owner isn't happy with this,
they can resell to someone needing less range.

After that, there really aren't many cycles left in the battery before it gets
to zero. Remember that cycles aren't the only thing degrading batteries -
simply storage also causes degradation, so even utilities who rarely have to
make use of their batteries (eg only once per week) might only see a year or
so use of the cells. I doubt that pays for the installation cost.

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mitchellst
The analysis assumes prices for these used battery packs are not governed by
supply and demand. What happens to this analysis 5-10 years from now when the
secondhand market for decade-used, 80% capacity batteries faces a supply glut,
with relatively few potential buyers? As the comments here make clear, it's
not altogether clear that such batteries are worth $15k now, as the paper
claims. Let's say they are worth that much-- sounds like a great opportunity
to build a business reconfiguring batteries for utility storage. But if you do
that job well, then once your utility customers have satisfied their peak
storage needs, your returning business drops to nothing, and the floor drops
out on this battery market.

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tyingq
If there is sufficient demand from utilities for these batteries, wouldn't​
the supply get ramped up?

I assume at a certain scale, the costs go down for everyone. Part of why used
combustion engines don't retain much value.

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lsternlicht
This argument avoids the issue of battery depreciation as well as the fact
that if you took the battery out of the car it's value goes to the scrap
value.

~~~
nickhalfasleep
For the cost of a new battery, you essentially get a car that performs just as
good as the day it rolled off the assembly line. And since most tend to come
with collision avoidance ability, more EV's might outlive their first battery
without any accidents.

~~~
URSpider94
That's a specious argument. Most gasoline powered cars today will be
performing as good as new at 100k miles with minimal attention beyond regular
oil changes and a new set of spark plugs -- certainly, you don't need a
complete motor replacement that early in. Likewise, any car with 100k miles,
EV or not, will have a pretty worn interior, need a new suspension, be showing
wear on its paint, have very out of date electronics and safety features, and
be out of fashion style-wise (and yes, that matters when it comes to price.
Just ask the designers of the Pontiac Aztek).

~~~
dzhiurgis
> Pontiac Aztek

Mother of god. That looks like US version of Fiat Multipla. Which somehow got
a cult following for its utility value.

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Aron
I believe that as batteries get on in in life their rate of decay accelerates.
It's not a linear process.

Maybe there's room for recovering the raw materials effectively, and I wonder
if there are upfront tradeoffs that could be exchanged to make that easier.
Musk has repeatedly said that scale cost reductions leads ultimately to
material cost limit and it's already up to ~50$\130$ per kwH.

~~~
klodolph
Apparently, recovery of lithium from batteries during recycling is not
economical, either in terms of money or energy efficiency. Additionally,
lithium batteries are more difficult to recycle due to their complexity and
the amount of variation between battery types.

Compare this with lead acid batteries. About 99% of lead acid batteries are
recycled, and the recycling process itself is rather efficient.

[http://www.sciencedirect.com/science/article/pii/S2214993714...](http://www.sciencedirect.com/science/article/pii/S2214993714000037)

~~~
Aron
Too bad it just didn't happen to be easy. I would hold out some hope for
recycling simply given that each Tesla model 3 size battery has 3,000$+ of raw
materials, and there will be literally billions of cells with identical design
to recycle. I would find it an interesting fact of the world that it's cheaper
to go back into the Earth's crust to get more than to somehow separate it out
from a pre-existing source that is highly concentrated.

~~~
klodolph
$3,000+ of raw materials is not the same thing as $3,000+ of lithium. The
batteries are already recycled to recover the cobalt and manganese, which are
valuable. The numbers I've heard suggest that less than 1% of the material
cost is lithium, but that number sounds a bit low—maybe less than 1% of the
total cost is the cost of lithium, perhaps. Battery grade lithium is around
$5/kg.

