Understanding the Economics of Aged Traction Batteries: Market Value and Dynamics

The growing demand and market penetration of electric vehicles (EVs) have led to an expansion in the size of the market for used EVs, accompanied by a continuous increase in the return rate of aging battery systems. Consequently, a second-hand market for aged battery systems, known as second-life batteries, is slowly emerging. Understanding this market is crucial for enabling a functioning circular economy for batteries. This paper analyzes the market mechanisms influencing price formation for used goods, drawing parallels to the largest second-hand market, the used car market, and applies them to the second-life battery market. By examining these mechanisms, insights are provided into the dynamics of the second-life battery market, facilitating the development of strategies to optimize resource utilization and sustainability in the EV industry. Finally, the second-life battery price index is introduced, increasing the transparency of prices for lithium-ion batteries and the circular economy.