Even after they have degraded too much for continued automotive use, the lithium-ion battery packs in electric cars still have significant useful storage capacity.

That's led several automakers to experiment with alternative uses for these "second-life" batteries in stationary energy storage.

Battery packs can store energy generated by renewable sources for later use, or act as a limited backup power source.

DON'T MISS: BMW electric-car batteries to be used as home energy-storage devices

But is that really the best use for these battery packs?

Would it be better to recycle the packs, disposing of them in the same way as most other components from cars that are at the end of their useful lives?

Recycling used electric-car battery packs would in fact be the better option, argues a new report from Lux Research (via Charged EVs).

Battery storage system electrified by BMW i

Reuse delivers "questionable returns on account of reduced performance," the report said, limiting second-life batteries to applications with "less frequent and shallower depth of discharge cycles."

Lux Research believes this makes used electric-car battery packs unsuitable for residential energy-storage systems.

A hypothetical 11.2-kilowatt-hour system using second-life batteries would cost $4,600, compared to $6,000 for a 7-kWh system, the report acknowledged.

MORE: Nissan home energy-storage battery: another front against Tesla?

But "reduced round-trip efficiency and cycle life" make used battery packs a poor fit for residential energy-storage use, it argues.

BMW and Nissan have both expressed interest in marketing such systems, using lithium-ion battery-pack modules taken from their electric cars.

Nissan, as well as General Motors, has also experimented with commercial energy storage systems that use second-life lithium-ion battery packs, while Toyota has undertaken a similar project with much smaller used nickel-metal-hydride batteries from its Camry Hybrid.

Nissan xStorage battery pack for energy storage

However, Tesla—which markets its Powerwall and Powerpack stationary battery packs—prefers recycling, according to Lux Research, because its NCA cathodes are not suitable for most energy-storage applications.

Of the currently-available recycling technologies, Lux says pyrometallurgical processing—or smelting—is the most mature. Other options, including mechanical or hydrometallurgical processing, are also available.

The research firm predicts that 65 gigawatt hours of second-life battery packs will enter the market in 2035 as the first major wave of electric-car retirements begins.

Lux noted that advances in areas such as packaging could make reuse more competitive with recycling, but that as things stand now, it suggests that the latter is the better option.

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