A Critical Review of Sustainable Business Models for the End-of-Life Strategy of Electric Vehicle Battery Second Use
Posted: 23 Jul 2019
Date Written: July 23, 2019
The recent entrance of electric vehicles (EVs) presents a great opportunity for a sustainable transportation system in the future but the high costs of installed lithium-ion batteries still hinder a faster global market adoption. Battery second use (B2U) has been identified to be a promising value creation mechanism that could provide some additional revenue to EV manufacturers. B2U in less demanding second life applications such as stationary energy storage systems presents a cost effective option that can contribute to building smart grid technologies. Through remanufacturing and reuse, B2U can overcome critical environmental impacts and natural resource scarcity and is thus in line with the principles of the circular economy (CE) which has resource life extending strategies at its core. However, it is still unclear how a firm might translate such strategies into innovative business models for the CE. Recently scholars have argued that the concept of the CE prioritises environmental sustainability and the economic systems (circular models) while often disregarding the social dimensions and objectives. The evolving major research topic around sustainable business models (SBMs) seem to be able to bridge these concerns as they have the potential to solve economic, ecological and social issues simultaneously. Consequently, this study follows the argument that the emerging B2U industry can deliver not only economic value but also wider social and environmental values as part of new and more SBMs. Data were collected from reputable sources, mainly peer reviewed literature, but also to some extent from grey literature (e.g. company releases) news bulletins and press releases due to the nascent stages of both evolving research streams. The necessity of this interdisciplinary review was confirmed through this screening process as qualitative (sustainable) business model studies for B2U are in urgent demand as the majority of previous research has mainly focused on quantitative techno-economic and environmental feasibility studies without implications for potentially evolving (sustainable) business models. Results show that the concept of B2U leads to shared value creation mechanisms for the EV industry as part of innovative SBMs. There is the potential of an evolving B2U market as increasing volumes of cheap batteries will be taken back to the OEMs in upcoming years that could provide valuable services in the stationary storage sector. The discussion further found that OEMs have started pilot projects to comprehend the feasibility and capabilities of B2U from a business model perspective. But, market developments were found to be speculative as companies entering this new industry are still evaluating if B2U is a profitable business or not. Yet, ongoing B2U projects informed that innovative cross-sectoral multi-stakeholder relationships between the previously isolated automotive and energy markets are forming. These stakeholders’ primary interest lies in the investigation of the full potential of second life batteries and hence new business opportunities that contribute towards functional corporate sustainable development. Therefore we conclude that B2U holds the potential to increase the residual value of EV batteries leading towards a faster EV market uptake and improvements of overall sustainability performance through SBM perspectives.
Keywords: sustainable business model; electric vehicle; battery second use; end-of-life; circular economy
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