13 Feb 24

Why used EVs need battery health certificates

An influential parliamentary report has called for more action to develop a battery health standard for electric vehicles, in order to reassure buyers of used EVs and shore up residual values.

“Consumer confidence in the second-hand market is currently being undermined by uncertainty and concerns about EV battery health,” said the new report, which was published by the Environment and Climate Change Committee of the House of Lords in the UK.

It cited market research conducted last year by the Green Finance Institute (GFI) that found 62% of consumers would not buy a used EV because of worries about battery lifespan, the number one barrier to used EV adoption.

Phone fears

Experience of the rapid degradation of mobile phone and laptop batteries has planted seeds of doubt in the minds of potential buyers. The high cost of replacement batteries, which can represent up to 30% of the price of a vehicle, simply raises anxiety levels.

“Fear of poor battery health is the single biggest barrier preventing the used EV market from taking off,” said the GFI. It suggests the creation of a standardised battery health certification scheme for used vehicles alongside battery value guarantees that would guarantee an end-of-life value for EV batteries.

Used car buyer confidence in the longevity of EV batteries will become increasingly important to fleets and leasing companies as they start to remarket higher mileage EVs. If used EV prices drop, lease rates will rise to compensate for the extra depreciation, raising costs for fleets.

OEM warranties

Vehicle manufacturers typically provide battery warranties for a maximum of eight years or 160,000km (100,000 miles), whichever comes first. This means that the batteries of a typical four years old, higher mileage company car with 130,000 km (80,000 miles) will only have 30,000km (20,000 miles) of remaining OEM warranty.

Matthew Freeman, senior consultant, cap hpi, challenges the idea of fleets running company cars for such high mileages, with hybrid working practices and video communication eliminating many of the journeys that employees might have undertaken a few years ago, although light commercial vehicles are more likely to approach the distance limits of their battery warranties.

Research by the BVRLA, which represents the UK leasing industry, indicates that the average car leasing contract is now for 84,300km (52,700 miles), whereas van contracts are stretching out for an average of 127,400km (79,600 miles).

Extended warranties

“As we move away from early adopters into the mainstream consumer used market, battery health is going to be something on people’s radar,” said Freeman.

He added that initial manufacturer data indicated the resilience of EV battery technology is better than OEMs had expected. As this real-life data builds, manufacturers will start to communicate it more forcefully, said Freeman.

Extended battery warranties may also become part of OEM’s vehicle marketing strategies. New entrant Zeekr, for example, is launching its EVs in Europe with a 10-year, 200,000km warranty.

Taking care of batteries

The long-term health of batteries is of keen interest to leasing companies, too, as they seek to offer second and even third life leases. Having had EVs on its fleet since 2010, Arval’s understanding of their performance indicates that, as with petrol and diesel models, best practice in following manufacturer recommended service schedules, maintenance and battery care ensures vehicles are more likely to be reliable for longer.

Elliot Woodhead, Arval Global Remarketing Director, said: “For battery health specifically, we are investigating opportunities and the articulation of battery health is something which will need to be considered carefully – customers have never had an engine health check. As people’s understanding of the technology develops and the skill to carry out maintenance on EV battery cells becomes more common place, we expect there will be less anxiety about the battery (just as there isn’t with the engine alone today).”

He added that used car buyers are basing their understanding on phone or laptop battery performance, rather than on vehicles, which is where a battery health check is likely to give confidence. Arval Re-Lease customers in the UK have the option to add a product known as Arval Total Care to their used lease agreement (similar options exist in other European countries), which covers most major costs for the vehicle within a monthly rate and thereby minimises the risk for customers.

“As more EVs are on the road for longer, we believe that coupled with effective battery care education – such as don’t regularly rapid charge or charge to over 80% –  people will have more confidence in EVs generally,” said Woodhead.

Independent battery health checks

Establishing a standardised format for battery health checks is problematic, raising the question of whether to rely on monitoring technbology embedded by OEMs in their own vehicles, or set up an independent measure. CARA, the European car remarketing association, has approved two independent battery health check schemes, one by Moba and the other by Aviloo, that are designed to show a state of health based on a percentage of the original, type approved usable battery capacity.

Aviloo's research has found that driver behaviour has a key role to play in protecting the health of batteries. Having studied 402 EVs of the same brand, it found that drivers with a higher energy consumption not only cost more in recharging expenditure, but also aged their vehicles’ batteries more rapidly by requiring more charging cycles.

Nikolaus Mayerhofer, Aviloo CTO, said: “Through simple driver behaviour you can achieve a 10% reduction in consumption, which not only leads to considerable energy savings over the service life, but also means that 100,000km in one car is comparable to 110,000km in another.”

Battery failure rate is rare

In the US, analysis by Recurrent, based on 15,000 EVs has found a battery failure rate of just 1.5%. Its studies have found that EVs lose 30 to 60km (20 to 40 miles) of maximum range in the first 30,000km, but after this point the range declines much more slowly, until right at the end of a vehicle’s life.

“Odometers are the rule of thumb that has always been used to determine the value of a used car - but it simply doesn’t make sense with electric cars,” according to Recurrent. “We see ‘low mileage’ used EVs with batteries that are substantially worn down compared to their original state. We’re seeing ‘high mileage’ cars that have been carefully charged, or had their batteries replaced along the way, with real-world range similar to what they had initially.”

Image: Shutterstock_2164049979

Authored by: Jonathan Manning