Power batteries are the core components of new energy vehicles, and their technological innovation and cost control are key to the high-quality development of China's new energy vehicle industry. But currently, power batteries are facing serious homogenization competition, high costs, and urgent need to address safety hazards.

　　Experts from NRDC believe that in order to solve the above problems, the power battery industry should leverage the policy benefits of vehicle network integration for multi scenario application design. Among them, the most promising application scenarios are the implementation of vehicle to network interaction (V2G) and the cascading utilization of power batteries.

　　Policy benefits of V2G

　　In the past two years, documents such as the "14th Five Year Plan for Modern Energy System", the "Electricity Demand Side Management Measures (2023 Edition)", and the "Notice on Further Accelerating the Construction of the Electricity Spot Market" have been released, and the importance of electric vehicles as load side flexibility adjustment resources has received unprecedented attention. Electric vehicles can perform bidirectional charging and discharging with the power grid through V2G, charging during low electricity consumption periods and discharging in reverse to the power grid during high electricity consumption periods, which can play a peak shaving and valley filling role.

　　In August of this year, the Action Plan for Accelerating the Construction of a New Power System (2024-2027) proposed that the demand side response capacity of typical regions with conditions should reach about 10% of the maximum electricity load. V2G is one of the important means to enhance response capability. In September this year, the National Development and Reform Commission and four other departments issued a notice on promoting the pilot work of large-scale application of vehicle network interaction, which will carry out V2G scale application pilot projects nationwide. V2G is facing significant development opportunities.

　　Power battery and V2G

　　As the core component of electric vehicles, the technological development trend and cost of power batteries directly affect the healthy development of new energy vehicles. The National Development and Reform Commission and other departments will release the "Implementation Opinions on Strengthening the Integration of New Energy Vehicles and the Power Grid" (referred to as the "Vehicle Grid Integration Policy") at the end of 2023. The first key task is to "increase the key technology research and development of power batteries, improve the cycle life of power batteries to 3000 times or more without significantly increasing costs, and overcome battery safety prevention and control technologies under high-frequency bidirectional charging and discharging conditions." In order to effectively leverage the flexible adjustment capabilities of new energy vehicles for controllable loads or mobile energy storage, the technological development and cost control of power batteries are crucial.

　　Previous policy documents on the development of power battery technology mainly focused on battery energy density, and manufacturing companies' R&D investment also focused on improving battery energy density. The introduction of the vehicle network integration policy has proposed new solutions for the development of the power grid and new energy vehicles, and also brought new development opportunities for power batteries.

　　The industry dilemma of power batteries

　　The current problems faced by the power battery industry include severe homogenization competition, high costs, and urgent need to address safety hazards.

　　To meet the needs of end users, battery design focuses on alleviating their range and charging anxiety. Therefore, the technology research and development of power battery enterprises mainly focuses on high energy density (long endurance) and ultra fast charging technology, and the technology route tends to be similar to the research and development of high energy density batteries such as all solid and semi-solid state batteries and high-power fast charging batteries. However, due to the high requirements for process technology in solid-state batteries, the current cost remains high. The cost of all solid state batteries can reach 30-40 yuan/Wh (battery cell), and the lithium metal negative electrode used in solid-state batteries increases the risk of spontaneous combustion while improving battery life. For fast charging batteries, although the cost has decreased due to technological development, high-power charging and discharging have increased safety hazards.

　　In addition to the challenges in the development of power batteries mentioned above, a single technological route choice has also brought broader negative impacts to the industry ecosystem.

　　Firstly, high-power charging poses a threat to the reliability of the distribution network and affects the car owner experience. A large number of electric vehicles, especially high-power fast charging electric vehicles, if charged during peak load periods, will pose challenges to the safe and stable operation of the power grid, and put forward higher safety level requirements and distribution network capacity demands for charging stations. All of these urgently require the expansion and renovation of the power grid, and the development of the distribution network requires time and funds for orderly construction. The rapid development of high-power fast charging batteries will only lead to difficulty in charging and affect the car owner's experience. In the summer of 2024, the electricity load in Chengdu will rise and the power supply will be tight, forcing the closure of some electric vehicle charging stations. This practice of cutting off the charging load of electric vehicles has brought great inconvenience to the travel of electric vehicle users.

　　Secondly, a single technological route drives the concentration of resources towards a few battery manufacturing giants. To enhance safety, all solid state batteries require higher levels of process design and production, and fast charging batteries also require safer battery management systems. These have put forward very high requirements for the production, technology, and management levels of battery enterprises. At the same time, due to the relatively single technological choices and large investment in mainstream technology research and production, enterprises need to have strong funds to support raw material supply and production. Small innovative enterprises find it difficult to enter the power battery industry, resulting in a trend of resource concentration towards a few battery manufacturing giants. In the long run, it is not conducive to the healthy development of the industry.

　　In addition, the upward layout of the industrial chain increases the operational risks of enterprises. In order to stabilize raw material costs, power battery companies have been expanding upstream in the industrial chain and investing in the mineral resources industry. But this also increases the heavy asset investment of the enterprise, and the operational risk of the enterprise increases. In this situation, the resilience of each link in the industrial chain is relatively low. If a company encounters financial or operational problems at a certain stage, it will be difficult to maintain normal production. In addition, due to the long industrial chain layout of enterprises, the funding for research and development is limited, which reduces the innovation capability of enterprises and makes it difficult to adapt to rapid market changes.

　　The road to breaking through power batteries

　　The above problems not only lead to oversupply, insufficient technological innovation, and low industry chain resilience in China's power battery industry, but also put power battery enterprises in a dilemma of continuously compressed profit margins. The key to breaking the deadlock lies in the multi scenario application design in product development: considering the needs of relevant entities in the use of electric vehicles, such as distinguishing between power grids, users, and new energy generation enterprises, designing more segmented products to meet different scenario needs and improve product competitiveness.

　　Specifically, in the future, electric vehicles can be classified into long-range, fast charging, and V2G types, corresponding to different scenarios such as long-distance driving, operational driving (i.e. taxis and buses that require rapid energy replenishment), and short distance commuting. In these three scenarios, electric vehicles for short distance commuting have regular driving periods, which are suitable for participating in V2G and providing regulation capabilities for the power system. When designing V2G batteries for production, the need for frequent charging and discharging should be considered. In the other two scenarios, the likelihood of electric vehicles participating in V2G is relatively low, and after the electric vehicle is scrapped, the battery may have a certain remaining charge and discharge life. When producing and designing this type of battery, the need for cascading utilization can be considered.

　　V2G enhances the full lifecycle value of power batteries

　　V2G enables power batteries to fully utilize their value before electric vehicles are scrapped, charging during periods of low electricity demand, discharging during peak periods, or serving as backup power sources. This not only solves the needs of the power grid, but also helps users benefit from it, achieving a win-win situation.

　　From the perspective of car owners, the recycling price of used cars in the second-hand car market is relatively low after the scrapping of electric vehicles. According to data from the China Automobile Dealers Association, the current three-year residual value rate of used electric vehicles is less than 50%, which is significantly lower than that of used fuel vehicles. If V2G can generate economic returns during use, it can reduce the cost of purchasing a car and increase the willingness of car owners to buy a car. Based on the current subsidy form of V2G, the annual revenue can reach around 4000 yuan.

　　From the perspective of the power grid, the large-scale integration of new energy sources such as wind and solar power has led to increasing difficulty and cost in system regulation. As the most cost-effective flexible regulation resource, electric vehicles can significantly reduce the cost of power system transformation and provide support and guarantee for the safe and stable operation of the power grid.

　　However, V2G requires the battery to be able to adapt to frequent charging and discharging, ensure safety, and ensure that users have certain benefits. Therefore, it is necessary to design low-cost, high charge and discharge life power batteries, and equip them with a battery management system that monitors the health and energy status of the battery in real time to ensure that the battery is always in a safe operating state. When the power grid generates demand, such power batteries can respond promptly while ensuring safety, and bring benefits to users while considering battery costs.

　　Utilizing the residual value of waste power batteries through cascading utilization

　　The recycling of power batteries includes regeneration and cascading utilization. Recycling refers to the resource utilization of waste power batteries through dismantling, metal extraction, and other methods to recover valuable renewable resources. And cascading utilization is the process of screening retired power batteries, selecting batteries with better performance in battery packs or modules for reuse through energy storage or backup power sources.

　　If directly recycled, only material level value (nickel, cobalt, lithium, manganese, and some metals and carbon materials) can be recovered, wasting the cycle charge and discharge life of power battery products. In fact, after the scrapping of electric vehicles, the power battery may not be completely scrapped, and there is still residual value, that is, there is still a charging and discharging service life. Through cascading utilization, it can continue to "emit light and heat", which to some extent alleviates the problem of tight supply of raw materials for power batteries. However, at present, retired power batteries have insufficient consideration for performance and original design, resulting in the need to improve the economy and safety of cascading utilization.

　　Conclusion

　　The healthy development of the power battery industry depends on the sustainability of the industry chain, so it is necessary to consider both maximizing benefits and recycling resources. Promoting multi scenario applications and implementing cascading utilization of V2G and power batteries is a key strategy to achieve this goal. In the context of the construction of a new power system, transforming electric vehicles into the most flexible power regulation resource in the power system can not only solve the dilemma of power batteries, but also provide strong support for the construction of a new power system.