Retired EV Batteries Can Play a Vital Role in Making Clean Energy More Affordable and Accessible

Most electric vehicle (EV) batteries are retired with as much as 70% to 80% of their original capacity remaining. They still work, but their performance no longer matches automotive requirements that demand full charging capacity for long-range driving.

Over time, factors like repeated charging cycles, heat exposure and chemical aging gradually reduce a battery’s ability to hold and deliver energy efficiently. Yet even at 70% capacity, retired EV batteries can serve a “second-life,” providing other kinds of electric storage needs, such as powering homes, businesses or even smaller vehicles.

Finding second-life options is critical because by 2035, the supply of retired EV batteries is poised to surge, exceeding 300 gigawatt-hours globally — equivalent to roughly 4.6 million batteries that could be treated as waste. According to BloombergNEF, an energy research firm, at least half of the batteries will come from China alone. The remaining capacity in these retired batteries could power as many as 20,000 U.S. homes or 10 times that amount in India, for an entire year — a staggering amount of capacity.

Yet despite this potential, efforts to repurpose EV batteries remain fragmented, with no shared framework or clear safeguards to ensure their equitable and scalable deployment.

To move forward, we need to answer questions about not only whether these batteries will be repurposed, but also how, and who may benefit. With the right frameworks in place, second-life EV batteries could be a growing energy source and expand equitable access to affordable, clean and reliable power.

How Can Retired EV batteries Find a Second Life?

Retired EV batteries can store electricity with a variety of different use cases, including:

Grid Energy Storage

Second-life EV batteries can have enough capacity for large stationary grid-level storage.

For instance, in California, a 12 megawatt-hour (MWh) facility from energy system developer B2U, uses hundreds of second-life Honda EV batteries that are charged by 1.5 MW of solar generation. The project is interconnected into the electric utility’s distribution system and sells electricity and grid services into the California Independent System Operator market. Similar projects are being piloted globally, too.

Commercial, Industrial and Community Backup Power

Many commercial and industrial energy storage solutions rely on lower-capacity lead-acid batteries. Second-life EV batteries, which use lithium, have higher storage capacity and can replace or supplement traditional energy storage systems found in warehouses, telecommunication towers, data centers or in community centers. For example, China Towers, one of the largest telecommunication tower operators globally, is replacing their lead-acid batteries with second-life EV batteries to use as backup power storage for 5G base stations.

Second-life batteries are already being used to support AI data centers, which are raising concerns about supply shortages and blackouts. These batteries instead offer clean energy storage capacity that can improve data center load flexibility.

Second-life batteries can also offer critical support to community centers, particularly emergency shelters, by providing off-grid power for cooling, food distribution and health services during natural disasters, blackouts or other types of emergencies.

Mini-Grids for Rural Electrification

In households or communities where grid access is limited or too expensive — especially rural communities or remote areas of developing countries — second-life EV batteries can be paired with small solar installations to provide power. Mini-grids that use second-life batteries as a substantial, more affordable supply source can help close this gap. The World Bank estimates that more than 160,000 mini-grids are required to address energy access needs in Sub-Saharan Africa alone and in Kenya, analysis from WRI’s Energy Access Explorer estimates that as many as 1.8 million people living in rural areas may benefit from this kind of solution.

Additional EV Applications

Second-life EV batteries can still be used in the EV industry, exemplifying an elegant circular use case. Two key applications are:

• Large EV batteries can be repurposed for smaller vehicles like two- and three-wheelers that have much lower power requirements. For example, companies like Qtron in Kenya are using second-life hybrid/electric batteries for electric two-wheelers (boda bodas) and three-wheelers (tuk-tuks). These second-life batteries cost significantly less than new batteries making electric mobility more affordable.
• Second-life EV batteries can also buffer fast chargers by slowly pulling electricity from the grid when demand is low, storing it and releasing it quickly during charging. This can help the grid manage EV demand, reduce peak demand charges and enable fast charging in grid-constrained locations. For instance, India’s first off-grid, solar-powered EV charging station near Bengaluru airport uses second-life EV batteries to store rooftop solar energy, enabling 24/7, low-cost charging for up to 23 vehicles. This reduces grid reliance, manages high demand and promotes a circular economy.

Scaling Second-Life Batteries Comes with Big Benefits

In addition to providing more affordable energy storage solutions and expanding clean energy access, scaling second-life batteries includes many benefits, such as:

Creating Jobs

Local microgrids, solar rooftops and other decentralized forms of generating clean electricity create an excellent opportunity for local jobs. For example, an average mini-grid in Kenya creates 12 jobs according to a study by the International Labour Organization. In addition, the process of developing second-life batteries, from collection to capacity evaluation, tends to be labor-intensive and will also create jobs.

Encouraging EV Adoption

The high upfront cost of EVs, combined with rapid depreciation, can often discourage commercial EV buyers. A well-established second-life battery market can help commercial EV owners recover some value after selling their batteries, lowering their total cost of ownership. For example, electric truck components can retain 15% to 20% of the initial value by year five, which can add up for companies that manage large fleets. Expanding efforts like the Community to Advance Finance for Electric School Buses (CAFÉ), that bring together financing and investor communities to develop innovative tools for fleets, can help ensure cost savings are captured.

Second-life batteries can also lower costs for electric two- and three-wheelers and support the affordable expansion of charging infrastructure. At the same time, they allow countries to capture more value from the EV supply chain while providing a sustainable pathway for battery end-of-life management. Together, these benefits can help accelerate EV adoption and strengthen the broader e-mobility ecosystem.

Reducing Emissions and Waste

Manufacturing an EV battery comes with a heavy environmental impact. Studies show that second-life battery use is preferred to recycling when it comes to greenhouse gas emissions, ecosystem pollution, resource use and human health. Although the numbers vary depending on battery chemistry, second-life applications, electricity mix and recycling efficiency, the “reduce-reuse-recycle” hierarchy is best from an environmental perspective for batteries.

Supporting Energy Security

Regions like Europe face the dual challenge of strengthening energy security by accelerating the deployment of renewables and storage solutions while reducing dependence on imports of clean energy equipment. Using second-life batteries for stationary storage in domestic markets can help meet both goals. Recent research estimates that the EU’s need for stationary storage batteries can be fully covered by reusing 40% of electric vehicle batteries by 2040.

Addressing Key Challenges to Scale Second-Life Batteries

To capture these big benefits, we need to overcome several systemic challenges and uncertainties that include:

Increasing Economic Viability

New battery prices have been falling dramatically over the past decade, from around $1,000 per kilowatt-hour (kWh) in 2010 to below $100 per kWh in 2025, driven by massive scaling in production and intense competition between manufacturers. At the same time, most of the cost of second-life batteries today comes from labor-intensive disassembly and testing, which has been more difficult to reduce.

Narrowing cost advantage and shorter remaining use life compared to new batteries are putting the economic viability of second-life batteries under increasing pressure. This varies by geography and battery chemistry. In countries like India or Kenya, where labor costs are lower and price sensitivity is higher, second-life battery installations can expect higher margins than countries like the U.S.

Furthermore, due to their longer lifespans and less valuable critical mineral content, second-life use of lithium-iron-phosphate batteries may be more economically attractive compared to other kinds of batteries, like nickel-cobalt based batteries. Continued innovation in battery diagnostics, automated disassembly and pack-level repurposing could reduce second-life processing costs significantly over time, helping preserve competitiveness even as new battery prices decline.

Improving Safety

EV batteries (made of lithium-ion) run the risk of rapid overheating, fire or explosion when the battery temperature increases uncontrollably. Second-life batteries are not inherently more likely to catch fire than new batteries, but they can present higher safety risks if they are not properly tested, graded and managed before reuse. This risk is particularly high in countries where the informal sector is heavily involved in waste collection and management, and lack access to proper training and tools to handle used batteries safely. As regulations, training programs and certification schemes mature, the safety performance of properly tested second-life systems is expected to increasingly approach that of new battery installations.

Mitigating Illegal Dumping Risks

Exporting used EV batteries from wealthy countries to developing countries risks increasing the illegal dumping of hazardous waste. Each year, millions of tons of electronic waste are shipped to Africa under the guise of reusing products, only to end up in dumps, polluting the air, water and land, and causing health hazards to the local community and waste workers. The practice persists in part because exporters are side-swiping costly disposal fees by exploiting a loophole in the Basel Convention — an international agreement that bans the trade of hazardous waste from richer to poorer countries but does not cover products shipped for reuse.

Stronger battery traceability systems, digital battery passports and stricter enforcement of transboundary waste regulations could help distinguish legitimate second-life applications from waste dumping. Clear standards for testing, certification and end-of-life responsibility could further ensure that exported batteries are deployed in productive use cases and ultimately managed responsibly.

Balancing Second-Life Use with Recycling

Second-life batteries may offer greater environmental benefits than recycling, but current market forces are pulling in the opposite direction. Recycling capacity is expanding rapidly — especially in China, the United States and Europe — and is expected to far outpace the amount of retired batteries by 2030, intensifying competition for feedstock.

At the same time, policies like the European Union’s Battery Regulation, which sets recycling targets for lithium, cobalt and nickel, will likely incentivize retired EV batteries be recycled instead of repurposed.

The result is a growing mismatch between what scientific studies conclude, and what the market and policy frameworks reward. This tension can be reduced through policy frameworks that prioritize the highest-value use of batteries across their full lifecycle, recognizing both repurposing and recycling as complementary strategies.

Improved data on battery health and lifecycle impacts can help policymakers and industry determine when second-life use delivers greater economic and environmental value before eventual recycling.

Next Steps to Responsibly Scale Second-Life Batteries

Before the big wave of retired EV batteries arrives in a few years, we are at an opportune moment to develop a game plan — to improve market economics, build guardrails and develop policies that can accelerate a broader second-life market. By developing clear policies and standards, advancing supportive technologies and leveraging new business models and financing tools, second-life batteries can scale responsibly, capturing its benefits, while overcoming the challenges.

Develop Clear Policies, Regulations and Standards

Although an increasing number of countries have established national policies in waste management and extended producer responsibility (e.g., India’s Battery Waste Management Rules, Colombia’s National Policy for Integrated Solid Waste Management, Kenya’s Sustainable Waste Management Act), policies targeting second-life batteries are still largely non-existent. Now is the time to develop clear, consistent policy frameworks that include standards for battery testing and certification, safety requirements, traceability mechanisms, producer responsibility obligations and conditions for determining when batteries should be repurposed versus recycled.

Some exceptions include U.S. states like Washington, Colorado and California, which have battery end-of-life policies or bills that consider second-life use, and China, which is the first country to establish a policy framework for both battery second-life use and recycling.

International and regional standards specific for second-life batteries are also emerging, with many other standards covering the performance, testing, transport and safety of EV batteries that can be relevant for second-life batteries as well.

However, second-life batteries are still left almost entirely to market forces, which alone are not enough to achieve the benefits, overcome the barriers and avoid their environmental and social risks.

Furthermore, current policies are not only limited on scaling second-life batteries, they may also unintentionally create disincentives (for example, by specifying recycled content requirements). There is a clear need for more policy development that provides direction and guardrails for second-life batteries as well as striking the right balance with recycling.

Advance Enabling Technologies

Rapid technological innovation in battery design and manufacturing directly impact the viability of second-life batteries. Variables like volume, technical viability, cost of repurposing and safety, however, can influence their impacts.

Advancements at the material and chemistry level of EV batteries can influence how much usable capacity remains after first life. Over the long term, as material technologies mature, these innovations are expected to significantly enhance the safety, longevity and overall viability of second-life batteries. In the short term, battery pack design innovations are making batteries easier to disassemble, reducing labor costs and enhancing safety.

Additionally, AI-enabled battery management systems and predictive analytics can enhance the technical viability of second-life batteries by enhancing state of health assessments, early fault detection and automated grading. Coupled with robotics for labor-intensive processes like disassembly, this leads to better valuation, reduced operational risk, offering transparency into battery health, usage history, second-life suitability and lower processing costs.

Leverage Innovative Business Models and Financial Tools

Novel business models have the potential to address some of the economic and operational challenges faced by second-life batteries. Redwood Materials, a leading U.S. battery recycler, has taken an innovative approach by pairing its recycling operations with a dedicated unit that repurposes retired EV batteries for energy storage. By managing both second-life use and recycling in-house, Redwood effectively controls multiple stages of the battery lifecycle, a strategy known as vertical integration. This approach allows the company to optimize the value extracted from each battery, ensuring that energy is reused before materials are recovered, while also streamlining operations and reducing market friction.

 Service-based business models can mitigate performance or reliability concerns about second-life batteries and encourage market adoption, such as “battery as a service.” Here, the owner or operator of EV fleets can optimize charging, second-life use and manage battery replacement risks for clients. For example, Zenobe offers Battery-as-a-Service Agreement to finance the up-front cost of bus batteries as well as any battery replacements required over the lifetime of the contract. At the end of their lifecycle in electric buses, Zenobe takes back the batteries and repurposes them for storage applications. Another version is “pay per use,” in which customers are charged based on the actual energy drawn from the battery systems.

Innovative financial instruments such as residual value guarantees, blended finance structures and performance insurance can help scale second-life use responsibly. By enabling financiers and fleet owners to account for the future reuse potential of batteries, these instruments can lower upfront EV costs while incentivizing high standards for testing and traceability. When paired with robust governance and data-sharing frameworks, they can accelerate investment into second-life applications such as stationary storage, microgrids and backup power while ensuring environmental and social safeguards are met. However, a lack of real-world valuation data on second-life EV batteries and a lack of standardized assessment procedures both severely limit the utilization of this value stream in current EV procurements.

Unlocking Second-Life Batteries Requires Ambition and Action

The energy transition is approaching a new and largely overlooked inflection point: a rapidly growing supply of electric vehicle batteries that are no longer suited for transportation, but still highly valuable. Second-life batteries could become a critical resource that lowers energy storage costs, improves resilience and expands clean energy access. But that opportunity is at risk. Falling prices for new batteries are undercutting the economics of second-life use. The lack of clear standards for safety, performance and data transparency is slowing investment. And absent policy is adding to uncertainty.

The result is a growing paradox: At the very moment the world needs unprecedented amounts of affordable energy storage, millions of batteries with years of remaining useful life could be prematurely recycled or disposed. The decisions made in the next few years will determine whether second-life batteries become a strategic asset for the clean energy transition or a missed opportunity. Governments, industry and civil society must act now to establish the policies, standards, business models and market incentives needed to scale second-life batteries safely, responsibly and at meaningful scale.

We need a coordinated global effort to answer the most pressing questions facing the sector: When does second-life use create greater value than immediate recycling? Where can retired EV batteries create the greatest net benefit — within their country of origin or in international markets where demand, affordability needs and economic viability may be higher? And what policies and market structures are needed to ensure batteries reach their highest-value use? The answers will shape not only the future of battery management, but also the affordability, resilience and sustainability of the broader energy transition.