We don’t usually see recycling as much of a money saver for big ticket consumer electronics. Some electronics makers still charge a premium for devices that count ease of recycling among their green credentials, and some companies charge to reclaim their equipment for recycling. (For example, I’d have to pay $30 for Apple (s AAPL) to take back my laptop for recycling unless I buy a new Mac to replace it). But for plug-in cars — overgrown consumer electronics in many ways — recycling the battery could be one of the keys to reducing cost.
According to electric vehicle infrastructure startup Better Place, whose plan involves buying hundreds of millions of dollars’ worth of batteries to “swap” into subscribers’ vehicles, manufacturing costs for plug-in car batteries won’t drop below €8,000 ($11,440) until after 2012. And at the end of eight years on the road (a “fairly conservative” estimate, says Better Place spokesperson Julie Mullins), a typical battery will have degraded down to 80 percent of its original capacity, and thus reached the end of its life in electric cars. But much of its value as an energy storage device remains. Enter: Recycling and reuse.
Rather than all of the battery costs being passed onto car buyers, what if they pay for only the small percentage of the value they’re getting, and automakers can gather the rest in the battery’s post-vehicle life? That’s how Nissan (s NSANY) hopes its new battery recycling joint venture, unveiled on Tuesday, will help it get an edge in the nascent market for electric vehicles.
As the Wall Street Journal reports, Nissan is forming a joint venture with Japan-based trading house Sumitomo to recycle lithium-ion batteries from electric cars (some 50,000 of them per year by 2020) to be used in energy storage devices for backup power, in an effort to help make plug-in models like the upcoming Nissan LEAF more affordable for the mass market. The announcement is the automaker’s latest move to try to capture the total value chain for lithium-ion batteries, following initiatives to make the cells through another joint venture, to deploying the cells in its own electric car, the 2010 LEAF sedan, and models from partner Renault.
Bolstering the secondary market for vehicle batteries could also serve to open more financing options for plug-in car buyers. That’s because a good chunk of the potential residual value (the car’s projected worth at the end of the lease) for these cars will hinge on estimates of how much the battery’s value will depreciate. That figure, in turn, could be affected by how much value it holds for emerging energy storage applications after its useful life in vehicles runs out. Rather than waiting on rating agencies and banks to be convinced of the LEAF’s resale value and the secondary markets for batteries, Nissan plans to provide the financing (and set the residual value) for most or all of the LEAF sedans in its initial rollout.
Better Place, meanwhile, is still working on the second part of the battery value equation. According to Mullins, the company is “evaluating both second life applications for used batteries” and working with automakers, battery vendors and recyclers on “emerging technologies” for recovering and recycling most (95 percent) of the materials in batteries that are “no longer operational.”
Will the startup work with Nissan? (Better Place already has a partnership with the Renault-Nissan Alliance.) It’s an option, says Mullins, but there probably won’t be a one-size-fits-all solution for all of the company’s batteries. “Recycling may differ on geography base, given both global and local regulations need to be followed,” she said. “Better Place is evaluating its recycling partners based on its target markets, and given our battery relationship with the joint Nissan-NEC venture AESC, we will also discuss recycling options with the new JV.”