Residual Value: Electric Batteries vs. Internal Combustion Engine Vehicles | Hacker News Reader

Residual Value: Electric Batteries vs. Internal Combustion Engine Vehicles

ark-invest.com

59 pointshunglee250 comments

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.

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.

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

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.

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.

After some googling I actually can't even find a place to buy replacements so I can price them (maybe I'm thinking about this wrong?) For a car, $4k sounds low enough that if it doesn't work out it's not /that/ big a deal. These used EVs sound great for someone that just wants to try the idea out without becoming totally invested.

My point was that these are 3-year-old cars, most with light usage. It's easy to find examples with 15k miles. The packs have held up very well - mine had lost at most 5% of its range, if that. So, assume 22kWh capacity left, that should be worth $4k alone by the author's metrics.

I agree it's terrible; even from TFA's opening paragraph:

> if electric utilities were to pay $15,000 per battery, the battery alone in a 10-year-old Tesla would retain more value than an entire vehicle powered by an internal combustion engine (ICE).

a) why would a utility pay that much ($2.2/cell) for a bunch of heavily-used 18650s when you can buy lightly-used 18650s on eBay today cheaper?

b) if you look up used 2007 Mercedes S550 for sale in the US, you'll see plenty that sell for $15k+.

a) surprise. Those "lightly used" cells aren't lightly used. Have you ever bought them? Cheap eBay cells are garbage.

Sure, I've bought a few, and my experience is "used LG/Panasonic/etc 18650s" are about as good as "new Ultrafire/TrustFire/etc. 18650s"

$4k sounds like a market failure, and probably Chrysler Fiat mismanaging the project. They treat the 500e with utter contempt.

If there's 18 kWh of the 24 kWh left, that's just $222/kWh. That would be a fantastic battery system for an off the grid home.

Well, it's a "compliance car": http://www.autoexpress.co.uk/fiat/500/87129/sergio-marchionn... . It would be far better if they took the idea seriously and did a proper electric car.

Pity, because I quite like the styling. They're nowhere near that cheap in the UK (ebay has exactly one, at £11,000) while Leaves are widely available.

Depreciation seems to be brutal for electric cars, and not just for the battery. It's more like the mobile phone market in the early 2010s: every year brings new features and is noticeably better.

I had one, and absolutely loved it. It was great when I had my own house and could charge easily, and also had space for a second gasoline car that I could use for longer trips. When I moved to an apartment with backwards landlords that wouldn't let me use an outlet by the car, it had to go sadly.

For $4k it's an absolute steal for a daily commuter car. It made me realize that driving could be a fun activity.

There is no such thing as a market price for a lithium battery. Even standard sized cells are far from a tradeable commodity.

Things like double digit subsidies and grants for eco-* stuffs in China and EU distort the picture.

What it means is that biggest Chinese EV makers with big enough GR-office can get cells for 20% of what is a wholesale price for Western buyer.

Chinese complain that 2kw/h battery packs for scooters cost $400 retail. They probably don't know how much they cost in US.

The 18650 cell is fairly standardized though.

One might imagine a machine to rapidly tear the cells out of car battery packs, automatically test each cell, and then reassemble the rest into a new utility level pack.

It might turn out to be better to just grind the whole lot up in a fire suppressing environment, extract the lithium metal, and remake the cells from scratch though.

>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

Good point. However, this also means that utilities are going to adopt renewables a lot more since storage will be getting cheaper.

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!

I think that there's still a need for significant exploration of the design space. What type of standard are you suggesting? Size? Connection? And how is that holding back anything at the moment?

Size: I'd suggest several standard sizes in multiples of 15cm (6 inches). For example 30cm cube. Connector: Should be recessed so it doesn't extend beyond size envelope. Voltage: Probably would need several. Connector should be unique to voltage. Multiple of 4.44 volts (NiMH x Li-Ion voltages).

Lack of standards holds things back when companies need to make a very large investment and need to know over what timeframe it will work. These standards could be in place for a long time. The "D" cell battery standard is over a hundred years old.

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.

Being able to quickly swap out a standardized battery at a charging station would be a huge competitive advantage.

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.

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.

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.

standard battery packs of known price, quality, and warranty

Here in China this is essentially the situation for the huge fleet of e-bikes from various manufacturers.

There you go. And the Chinese manufactures will likely create the standards for the larger batter packs. Customers will vote with their dollars. I assume that my first electric car will be Chinese. Might even have the name Tesla on it ;)

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

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

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.

It's more to reduce degradation - lithium batteries don't like being at <20% or >80% state of charge. If you never let them get there, they will last a lot longer.

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-...

You don't need particularly high density for storing your roof solar. Price is a lot more important, many people still use lead-acid for this purpose.

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.

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.

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.

Typical lithium capacity-age chart:

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.

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.

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.

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.

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.

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).

> Pontiac Aztek

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

Quality ICE cars are pretty trivial to run a long time. I drive a 2003 Honda SUV, which just hit 230,000 miles. I've probably put an average of $500 annual repairs for the last 6-7 years. Mostly drivetrain stuff that wears out like CV joints, sway bars, etc.

If you buy a electric car, you're not doing it to save money. The optimal ROI remains a 12-24 month old car with a certificatation program that you keep for 8-10 years. I'd rather do that and have $30k in the bank than futz with electric cars and unknown service lives.

Come again? Its value goes to (value of 10 yr old Tesla - value of used battery). This is much higher than scrap value.

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.

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...

if you plop a lithium recycler in the middle of sahara, or arizona, where solar power is plentiful, you only have to deal with the economics.

i don't see why tesla wouldn't do exactly this a decade or two from now, when there'll be 100x more lithium batteries at or near the limit of useful capacity. it could be literally next door to the gigafactory so they could feed it with a conveyor belt.

I'm a little skeptical—it sounds like the claim here is that we just have some technical hurdles, and we'll need some cheap electricity. Missing from this discussion is an analysis of the environmental impact of recycling and the environmental impact of mining.

By no means am I making claims about how batteries will be recycled in the future, I just think we should base our policy decisions on the science. Recycling lithium batteries is not easy, since they tend to blow up. The main recycling processes either toss them in an incinerator, cryogenically freeze them, or chop them up in an inert atmosphere. Most of them recover negligible amounts of lithium, which is cheap to mine anyway.

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.

$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.

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