The shift towards a more sustainable automotive industry is leading to the growth of multi-cycle usage models. As automakers aim to capitalise on technological innovation and changing customer usage, these strategies extend the life of vehicles, components and materials through repair, repurposing, and refurbishment.
In traditional automotive cycles, vehicles are manufactured for a single owner, before eventually being scrapped, with limited opportunities to recycle materials. This linear approach can lead to significant waste and inefficiencies. In contrast, multi-cycle usage models maximise the lifespan of vehicles and their components, as well as providing for longer term customer engagement in some cases.
For OEMs, multi-cycle usage models represent an opportunity to put more sustainable practices in place and to drive revenue by extending the life of a vehicle. It encourages engagement at each stage of the vehicle’s use – from initial sale to post-ownership stages – and means that OEMs can generate recurring income streams through secondary market resale, subscription services and leasing, and component reuse.
Unlocking value from used vehicles
The used-vehicle market – often viewed as a separate network – is becoming increasingly central to OEM strategies, especially regarding multi-cycle usage models. With growing customer demand for affordability and access, used vehicles present a chance to engage with new customer segments. Approved used cars, where OEMs refurbish and sell vehicles, exemplify this.
Similarly, retrofitting used-vehicles can extend their lifecycle. In these cases, an automaker will restore vehicles to a nearly-new condition, and add new technology, upgrading them to meet modern standards, most commonly by updating ICE (internal combustion engines) to electric powertrains. This enhances profit margins in secondary markets with rapid production and efficient use of resources.
Several leading OEMs are unlocking value from use vehicles. Renault Group’s renew factory, which it says is ‘dedicated to reconditioning used vehicles’, is an example of a refurbishment and retrofitting strategy. It aims to repair damaged vehicles and fit combustion-motor LCVs with electric batteries. Their plant also allows for repair and reconditioning of batteries, with the group aiming to use 33% of recycled materials in new vehicles by 2030.
Leasing and battery life management
The expansion of electric vehicles (EVs) in volume segments has led to more focus on leasing and subscription services. As well as catering to sustainability goals, used-vehicle leases enable automakers to retain ownership of batteries and manage their primary and secondary life applications.
VW’s electric ID offer is an example of OEMs seeking to keep battery packs in their possession for longer. The German automaker says their ID vehicles could go through three leasing cycles, with batteries lasting for ‘1,000 charging cycles and around 215,000 driven miles (estimated)’. The multi-cycle leasing model allows for an initial sale or contract, as well as secondary and tertiary leases of refurbished vehicles, creating additional revenue.
While electric powertrains introduce complexities around battery life and degradation, EV battery cells are highly valuable, and may retain value after their original vehicle has depreciated. Data is central to analysing and reporting on the state of health (SoH) of batteries, determining whether they have a secondary application. Where a batteries residual energy storage remains useful, it can be reused – in a mobility setting or elsewhere – or support raw material supply.
The shift to multi-cycle usage also aligns with changes to customer behaviour. Increasingly, customers are prioritising flexibility and sustainable practices over car ownership, leading to more interest in vehicle-as-a-service models, such as leasing and subscription services.
Creating efficiencies in the value chain with recycling
Another key feature of multi-cycle usage is closed loop recycling, with aluminium a key focus. This process involves recovering and reusing components from end-of-life vehicles, reducing carbon emissions and waste by keeping resources in the production cycle.
The concept of a zero waste, zero pollution vehicle has been encouraged by ‘The Circular Car Initiative’, a coalition of companies including the World Economic Forum. As part of decarbonising the industry, it suggests providing a productive second life for materials and ensuring internal strategies and wider policies are in place to support these steps.
Several automakers are leading the transition to a circular economy, driven by sustainability goals and regulatory pressures. For example, the 2021 Nissan Rogue is built using a closed-loop recycling system for aluminium parts, and BMW Group are investing €10 million into an inhouse battery recycling plant in Germany. This is alongside their existing ‘Recycling and Dismantling Centre’ which shares expertise with a global network and promotes resource conservation and economic efficiency in the automotive industry.
Moving towards a circular economy
The automotive industry has taken notable steps towards adopting recycling and reusing, with the principles of a circular economy becoming more widely recognised by the industry. For automakers, embracing multi-cycle usage offers significant benefits, both from an environmental and business perspective.
The ability to recycle and remanufacture parts reduces reliance on raw materials and can lower overall costs. It also provides a competitive edge, as both consumers and regulators demand more sustainable practices.
Similarly, by increasing the lifetime use of both vehicles and components, such as batteries, OEMs are creating greater efficiencies and recurring revenue streams. As usership options become more popular and opportunities to secure income from secondary and tertiary markets grow, embracing multi-cycle usage models will become a strategic imperative.