As the automotive industry transitions from internal combustion engines to electric vehicles (EVs), a profound shift in consumer priorities and industry standards is underway. Central to this evolution is the increasing significance of battery health certification, marking a paradigm shift in how used vehicles are evaluated.
For both businesses and consumers alike, understanding battery health is rapidly becoming a commercial imperative. The industry currently has a window of opportunity and as such must act rapidly to develop, adopt and deploy a standardised, pan-European battery health certification system. We must learn from experience if we are to avoid a financial calamity.
For example, who would have thought that not having a standardised charging connector to charge an EV was a good idea? Many readers may recall that is exactly what happened in the first phase of EV production. Different manufacturers adopted one of six different connectors. I ask you, could you imagine pulling into a petrol station only to realise that the nozzle of the petrol pump wouldn’t fit the filling point on your car? I rest my case.
Conforming with a single truth is vital for the creation of a unified reference point to ensure continuity in underwriting loans, trade-ins and resale values. Moreover, the framework that supports residual value insight to auto finance companies and banks is paramount. The smooth running of the multibillion € industry, that is auto finance, relies on accurate data. Not having access to accurate, timely data throws the industry into a state of flux which impacts all stakeholders adversely.
Happily, the Car Remarketing Association of Europe (CARA) are working diligently with a handful of fully accredited European companies who are the pioneers in this field. Remarkably, there are only three such companies: Moba; AVILOO; and PKC, headquartered in France, Germany and Italy respectively.
Vehicle valuation: a shifting landscape
In the past, the purchase decisions for second-hand vehicles predominantly relied on two key factors: the vehicle’s age and mileage. These parameters served as reliable indicators of a car’s wear and tear, as well as its remaining lifespan. However, as we move towards an electric age, these measures are becoming inadequate. With EVs, the battery is the heart of the vehicle, and its condition plays a far more critical role in determining the vehicle’s value and utility.
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By GlobalData
The health of an EV battery affects its range, performance, and, ultimately, its resale value. As such, both private buyers and fleet operators need reliable information about battery life and efficiency before making purchasing decisions. This shift necessitates the development and implementation of a comprehensive battery certification system that can objectively assess and report on these vital attributes.
Setting battery standards: pan-European certification
Given the pivotal role of the battery in an EV, a standardised certification system becomes essential. Such a system would not only provide transparency and reassurance for consumers but also facilitate smoother transactions and value assessments for businesses.
Certificates would be issued by each country adhering to a pan-European standard and ideally kept on file in a central registry. This would ensure consistency across borders, enabling a unified market approach. This would help mitigate current discrepancies in how battery health is assessed and reported. Consistent certification criteria would allow consumers to make informed decisions regardless of where the vehicle was originally purchased or currently resides within Europe.
Furthermore, this system would undoubtedly bolster consumer confidence in the burgeoning EV market. Without certification, potential buyers may hesitate to invest in second-hand electric cars due to uncertainties about battery conditions. A reliable certification process would address these concerns, encouraging more sustainable practices by incentivising the purchase of used EVs over new ones.
Battery certification: key requirements
An effective battery certification system should encompass several key metrics, such as battery capacity, energy retention, charging efficiency, and thermal stability. Additionally, the certification should consider the vehicle usage profile, as different driving habits and environmental conditions can significantly impact battery wear and tear. Consequently, the age of a vehicle becomes less of a marker in comparison to how it has been charged and driven.
Technologically, this requires the development of diagnostic tools that can accurately assess battery health. Collaboration between automotive manufacturers, battery producers, and tech firms will be crucial to creating these tools. Moreover, maintaining a real-time digital ledger, possibly leveraging blockchain technology, could enhance transparency and trust in the certification process, preventing potential fraud and misrepresentation.
Business and consumer benefits
For businesses, a standardised battery certification system offers numerous advantages. For instance, leasing companies and fleet managers can utilise certification data to optimise the lifecycle management of their assets, ensuring maximum efficiency and return on investment. Certified reports on battery health will also facilitate more accurate pricing models in leasing and resale markets, promoting fair trade practices.
Consumers, on the other hand, stand to benefit significantly from the assurance that comes with certified battery health reports. This will not only aid in making informed purchasing decisions but also provide peace of mind regarding the long-term reliability of their EV investments. Certified battery health information will also be invaluable for insurance assessments, potentially reducing premiums based on the verified condition of the battery.
The path forward
The transition to electric vehicles is inevitable, driven by the growing global emphasis on sustainability and carbon neutrality. As this transformation takes hold, the importance of battery certification cannot be overstated. A pan-European certification system is essential to support and accelerate this change, fostering trust and ensuring consistent vehicle valuations.
By prioritising the establishment of a standardised battery certification process, the automotive industry can help bridge the gap between innovation and consumer assurance. This will not only facilitate smoother integration of EVs into the market but also promote the growth of a circular economy within the sector. Ultimately, robust battery certification will be instrumental in unlocking the full potential of electric vehicles, solidifying their role as the cornerstone of future mobility solutions.
Paul Bennett, Senior Partner at Madox Square LLP (MSQ)
Labour’s EV agenda: building consumer confidence with UK car battery health certificates