Battery Degradation and Residual Values in Electric Fleets
By Mike Nakrani, CEO, VEV
I added my voice to the conversation about battery degradation and battery technology in May, suggesting that the latest EV batteries are likely to last much longer than the prevailing perception of 2.3% per year degradation.
I cited Tesla’s April Impact Report, announcing that battery degradation in its Model S and Model X vehicles is only 12% after 200,000 miles. Since larger batteries degrade more slowly, fleet operators that use trucks and buses have reason to be confident that EVs will be cost-efficient over the long-term.
The effect of battery degradation on EV residual values is a critical concern for fleet owners. Along with the benefits of fleet electrification – from decreased running costs to lower impact on the environment – managing residual values presents a unique challenge.
This is primarily due to the value of an EV being fundamentally tied to the health of its battery – a crucial, highly complex element of its design. An EV’s battery is the most expensive component of the vehicle, and by a considerable margin.
The value of healthy, efficient batteries for an EV fleet
Critical is the battery’s state of health (SoH), or its ability to withhold charge. In newly produced batteries the SoH is 100% – but their useful life is usually deemed over when this decreases to below 70%.
As a result, being able to decrease SoH degradation across all vehicles in an electric fleet has a significant impact on the operating business’ profitability.
Standard advice includes not repeatedly charging up to 100% capacity, consistently rapid-charging, or fully discharging the battery. Maintaining a charge capacity of between 20% and 80% also plays a big part in efficient EV battery operation.
Providing driver training to optimise EV driving techniques, as well as avoiding temperature extremes by parking in covered areas in low temperatures are also important, as is documenting vehicle-service records for when vehicles are sold on.
Mileage management processes help EV fleet operators extend the service-life of their EVs and boost residual value. Vehicle rotation within the fleet and using telematics to optimise routes and decrease unnecessary driving-time will also help.
Running an electric fleet is manifestly different from a diesel fleet. It requires multiple data sources including telematics, chargers, and energy to provide the insights needed to ensure the EV fleet operations and economics stack up. A spreadsheet and a fuel card will not work.
VEV-IQ is our control platform that enables managers of electric fleets to monitor vehicle performance, charging patterns, and energy consumption to maximise the fleet’s operational efficiency.
Battery balancing and warranties
Battery balancing is becoming a condition for vehicle warranty. Integrating battery balancing with EV charging involves the coordination of the charger and the BMS to monitor and adjust the charge distribution among the cells, ensuring efficient, safe, and effective battery maintenance. The effect is to ensure the longevity, safety, performance, and efficiency of the battery pack,
Boosting the residual value of electric fleets – future positive
There is cause for electric fleet operators to be optimistic about the length of EV battery life. Until now, most EV-makers have expected batteries to deliver 10 to 15 years of service. But new innovations in the industry suggest that the latest batteries – many of which are larger in size – may last much longer.
EV battery pricing is also coming down fast. The Department of Energy has reported that the cost of an EV battery was $153 per kWh in 2022, representing a 90% decrease on 2008 prices. As they become more affordable to produce, and lithium-ion technology increasingly capable, suppliers will develop higher-capacity batteries that degrade slower – enhancing their serviceable life.
EVs come with robust warranties anyway, which reduces the risk of large costs should a replacement battery be required. However, by following best practices for battery maintenance, mileage management, and leveraging data-driven insights, fleet managers can ensure their EVs retain maximum value throughout their service life.
Residual value optimisation doesn’t only protect your investment, it ensures electric fleets are sufficiently prepared for long-term profitability and sustainability.
Get in touch with one of our expert team and find out more about how VEV can help streamline your EV transition.