Nissan Motor Co., Ltd. and Sumitomo Corporation are planning to initiate a business venture to “Reuse, Resell, Refabricate and Recycle” (4R) lithium-ion batteries previously used in electric cars, giving them a second-life as energy-storage solutions in markets worldwide.
The 4R business model defined by the two companies is designed to capitalize on the supply of reusable lithium-ion batteries as electric cars achieve more widespread marketplace acceptance. Although today there is no existing supply of large-capacity reusable batteries, by 2020 in Japan, the demand for second-life batteries is expected to reach the equivalent of 50,000 electric cars per year at the minimum, as demand grows for an increasing range of energy-storage solutions.
The Nissan-Sumitomo announcement commits both companies to a joint feasibility study to establish a framework for a new joint-venture company expected to be operational by late 2010 in Japan and the United States. In Europe, Nissan will proceed to explore the 4R business model with its Alliance partner, Renault. A task force from Sumitomo and Nissan will work to finalize details such as the shareholding structure, capital investment, business structure and other operational concerns for the joint venture.
The 4R pillars for the second-life battery business are:
Reuse: Start second-life use for batteries with approximately 70 to 80% capacity;
Resell: Resell the batteries for various applications;
- Refabricate: Disassemble the battery pack and then repackage and customize to fit the client’s needs; and
Recycle: Implement end-of-life recycling to salvage raw materials.
Second-life batteries present an ideal solution to the renewable-energy sector, allowing energy to be stored for later use. Such ecological application of second-life batteries would contribute to a net reduction of CO2 beyond what is achieved by the all-electric car.
By 2020 in Japan, second-life batteries are expected to be in high demand for applications such as:
Energy storage with photovoltaic solar panels for residential and industrial needs;
Back-up power supplies;
Uninterruptable Power Supplies (UPS);
Load leveling for the electricity grid; and
Leveling of energy from both photovoltaic solar and wind power.
Nissan has an existing joint-venture company with NEC Corporation—Automotive Energy Supply Corporation (AESC)—to mass produce high-performance lithium-ion batteries. Even after the end of normal vehicle life, the high-performance lithium-ion batteries used by Nissan will retain 70 to 80% of residual capacity and can be reused and resold to various industries as a solution to energy-storage. With the new 4R business to be established, Nissan is fully engaged in the entire value chain of the battery, which is the most expensive component critical to power all-electric cars.
(Separately, GM is also considering launching a refurbishing business for the packs coming out of its Volt extended range electric vehicle and other plug-in vehicles, said Tony Posawatz, Vehicle Line Director for the Chevrolet Volt. That could entail reselling refurbished plug-in packs for other mobile vehicle applications (either large or small—the packs could be “disassembled” to provide smaller capacity solutions for very light electric vehicles such as e-bikes) or for stationary applications, he suggested. That work would be done at GM’s battery plant in Michigan.)
Nissan and Sumitomo say the 4R battery venture is a win for each. For Nissan, it will enable high residual values for electric-car batteries and support the company’s ongoing commitment to reducing the environmental impact of automobiles. For Sumitomo, second-life batteries will augment a wide range of its existing businesses, such as raw materials supply, car leasing, logistics and recycling.
This direct management of the battery’s entire value chain is important to ensure that our EV customers do not bear the cost of the battery. Nissan is exploring several options including battery lease or credit model based on a monthly payment scheme. With this proposition, the total running cost, which equals the monthly battery payment plus the cost to charge the battery, is comparable to the cost to refuel a similar gasoline-powered car. Ultimately, this is a compelling economic proposition for a zero-emission car that meets all your driving needs.
—Hideaki Watanabe, head of Nissan’s Zero Emission Business Unit