A circular EV economy is built on the principle of maximising the value of resources by keeping components and materials in use for as long as possible, and refurbishment plays a central role in this

Byline:  Kunal Mundra, Founder and CEO, Astranova Mobility

The adoption of electric vehicles (EVs) in India is steadily rising with close to 2 lakhs EVs being registered each month. This momentum has been created by supportive government policies, better products, a stronger eco-system and consistently improving economics compared to fossil fuelled vehicles.

This is significant progress for India’s journey towards a net-zero future, and it hides another equally large opportunity which is at the core of accelerating this transition to sustainable transportation – refurbishment of EV vehicles and their components, especially batteries, motors, and power electronics to create a genuine circular EV economy.

While there has traditionally been discussion around recycling as a means of unlocking value, we need to recognise that recycling is the right answer only at the end of life. Recycling these valuable assets at the end of just their first life is highly inefficient given that there is still significant value in the asset. Unlocking this value through refurbishment is critical since it has the potential to have significant economic benefits for the eco-system, accelerate adoption and amplify climate benefits for India

Refurbishment in the context of electric vehicles is the process of restoring used vehicles and their components—such as batteries, motors, or power electronics—to a functional state so they can be used again, either in the same vehicle or in another application. Unlike recycling, which breaks materials down to their raw form, refurbishment preserves most of the component’s structure and value by repairing, replacing, or recalibrating only the parts that have degraded. For example, in a battery pack, refurbishment might involve swapping out a few weak cells and rebalancing the pack and, in a vehicle, whereas recycling would dismantle the entire unit to recover the key chemicals i.e. lithium, nickel, or cobalt. This distinction makes refurbishment far less expensive, less energy-intensive, quicker to deploy, and more effective in extending the useful life of high-value EV assets before they ultimately reach the recycling stage.

Economic Benefits For The Ecosystem
An ecosystem designed for enabling refurbishment has several economic benefits for all participants. Refurbishment firstly allows us to extend the life of the asset effectively reducing the cost for all users or buyers of the asset across its life cycle which in turn improves returns on investment for all users by reducing the total cost of ownership. The option of used vehicles and components also allows more price sensitive customers to make the transition with less switching costs which in turn accelerates the transition to EV.

For financiers, a strong, predictable refurbishment market also leads to greater predictability of depreciation and LTV, and lower costs of redeployment. This is incredibly important for them since it allows them to go deeper down the credit curve and offer more, and cheaper financing to customers.

For OEMs there are of course the direct benefits of scale due to the points above which kick off virtuous cycle of demand – but it also gives them the opportunity to not just solve for lower upfront cost which is often the requirement in a cost sensitive market like India but it allows them to solve for more critical long term metrics like efficiency, performance and uptime since the higher upfront costs of better quality components gets spread over a longer period of time.

Lastly, since refurbishment requires skilled professionals, engineers, and logistics personnel, it bolsters local employment opportunities.

Environment Benefits
A circular EV economy is built on the principle of maximizing the value of resources by keeping components and materials in use for as long as possible. Refurbishment plays a central role in this, as it drastically reduces waste, lowers the carbon footprint of production, and cuts down the energy intensity associated with mining and processing new raw materials. For example, refurbishing an EV battery requires only a fraction of the energy and inputs needed to manufacture a new one, while significantly extending its usable life. Beyond the environmental benefits, refurbishment also opens up new revenue streams and reduces dependence on imported resources—particularly from countries like China—offering both economic resilience and strategic advantage at a national level.

Challenges And Enablers

While the benefits of a refurbishment centric circular economy are evident, the unfortunate reality is that the challenges are equally significant, and the eco-system will need to address them systematically to unlock the potential.

The most critical piece of the puzzle is right at the start of the value chain where OEMs will need to design products and components with a focus on repairability and modularity. Simultaneously the use of open-source data and tech platforms will be critical to enable ecosystem users to access, analyse and refurbish the vehicles. As always there is trade-off and more repairability could result in higher upfront costs. In the longer term this will need to be addressed through technology and value engineering, however in the short term it is worth exploring ways to boost industry participation for example governments can also offer incentives, tax breaks, and subsidies to companies that invest in refurbishment facilities or R&D related to refurbishment technologies.

Next, we need to build the right refurbishment capabilities in the ecosystem involving inspecting, testing, repairing, and upgrading used EV assets as well as EV components such as motors, chargers, and batteries, giving them a second life. Standards and metrics here will be critical to solve the next two challenges.

Firstly, customer awareness and acceptance will be critical to ensure that refurbished vehicles are able to sell at a fair price and not be heavily discounted. This will come from OEM led communication and programs as well as ecosystem wide standards and data which can give the customer confidence.

Financing and insurance coverage will also depend on the same enablers and will in turn, give customers the confidence to choose refurbished vehicles.

Call To Action
It is clear that the EV industry needs to switch to a circular economy model, where refurbishment becomes the central point in EV logistics and supply chains.

While challenges prevail, with a supportive regulatory framework, technological innovation, and evolving business models, refurbishment in a circular EV economy is poised for a multi-fold growth. With continued collaboration and investment, India can emerge as a global leader in EV refurbishment and circular mobility offerings.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the publication.