Battery Cascading Utilisation

Battery cascading utilisation refers to a circular economy repurposing method where retired EV traction batteries undergo diagnostic testing, grading, dismantling, and reassembly to be repurposed in applications with lower performance demands. Once an EV traction battery’s state of health drops to between 70% and 80% of its original capacity, it can no longer satisfy automotive driving range requirements; however, it retains substantial energy storage capability and can be repurposed for second-life duties in energy storage systems (ESS) and low-speed electric vehicles (LSEVs), before eventually entering the final material recycling and recovery stage once capacity degrades further.

Core Application Scenarios

The underlying logic of cascading utilisation centres on "matching the right battery to the right application"—pairing different energy density and operating duty cycle requirements based on the residual capacity and state of health (SOH) of retired packs. Key application areas include:

Energy storage systems (ESS) represent the primary application for second-life batteries today, covering commercial and industrial (C&I) storage, grid peak shaving, residential energy storage, and renewable energy integration. Repurposed batteries cost roughly 30% less than brand-new units, making them well-suited for stationary storage applications with less stringent power density and cycle life requirements. On the grid side, second-life batteries support load balancing, peak shaving, and emergency backup power, effectively boosting renewable energy uptake.

In low-speed electric vehicles and power tools, selected retired cells are refurbished for use in low-speed EVs, electric forklifts, and industrial equipment; given their low power draw and modest range requirements, these vehicles can effectively absorb healthy cells salvaged from retired automotive battery packs. Several players have established dedicated EV powertrain retrofitting operations around second-life batteries, rolling out viable commercial applications in rural transport and urban electric logistics.

In backup power supply, second-life batteries are actively deployed as uninterruptible power supplies (UPS) across telecommunications base stations, data centres, and rail transit networks. In 5G base stations, for instance, telco operators can upgrade backup power reserves while managing capital expenditure through the large-scale deployment of second-life batteries. Notably, China Tower Corporation Limited has deployed retired EV traction batteries on a massive scale as backup power for its telecom base stations.

Technical Workflow

The cascading utilisation of retired EV traction batteries encompasses critical technical stages, including diagnostic testing, sorting and grading, system integration, and safety management. The technical process involves: accurately evaluating remaining useful life and battery state of health via electrochemical impedance spectroscopy (EIS) and capacity retention tests; utilising standardised automated dismantling systems to separate battery modules and individual cells, followed by performance matching for optimised pack reassembly; and at the system level, integrating real-time capacity monitoring, thermal management, and safety protection within the Battery Management System (BMS), reinforced with thermal runaway prevention and fault diagnostics to guarantee operational safety.

Regulatory Policies and Industry Developments

The policy framework governing EV battery cascading utilisation has evolved across three stages—from initial directional guidelines to structured statutory implementation—and now broadly covers the entire lifecycle from collection to repurposing. To date, China has gazetted 22 national standards for traction battery recycling and utilisation, covering general collection requirements, dismantling protocols, and residual capacity testing, providing a robust regulatory foundation for the sector. Between 2018 and 2024, the Ministry of Industry and Information Technology (MIIT) released five batches comprising a total of 156 accredited "whitelist" enterprises for scrap EV battery utilisation, of which 105 are dedicated to second-life cascading utilisation. As of end-2024, the annual cascading utilisation capacity of these accredited Chinese enterprises reached 2.042 million tonnes.

Notably, under the "Interim Measures for the Management of Recycling and Comprehensive Utilisation of Waste Traction Batteries for New Energy Vehicles" taking effect on 1 April 2026, the statutory definition of comprehensive utilisation has been updated. The term "cascading utilisation" has been dropped in favour of an explicit rule stating that "no organisation or individual shall deploy scrap traction batteries, whether directly or after refurbishment, in electric bicycles or other applications prohibited by laws, administrative regulations, and mandatory standards". This regulatory revision aims to eliminate market confusion regarding second-life battery products and prevent non-compliant, unsafe batteries from entering the market.

Key Challenges

The second-life battery industry faces multiple hurdles. In terms of safety risks, long-term degradation triggers irreversible internal chemical reactions—such as solid electrolyte interphase (SEI) layer thickening, lithium dendrite formation, and electrolyte breakdown—heightening thermal runaway risks and complicating safety assessments. In terms of rapid diagnostic technology, evaluating battery health requires multi-dimensional analysis across capacity, internal resistance, and thermal response; while rapid, accurate screening is essential, current testing equipment remains expensive and data processing highly intricate. In terms of market disorder, unregulated grey-market players profit by outbidding compliant recyclers to hoard and resell scrap batteries, squeezing margins for certified operators, leading to erratic product quality, and creating an uneven playing field where compliant players are undercut by unlicensed backyard workshops.

Furthermore, critical issues such as the lack of mandatory national safety certification for second-life battery products, the absence of unified technical standards for performance benchmarking, and inadequate inter-agency regulatory coordination remain to be addressed.