<p>The global transition to electrified transportation is accelerating as countries seek to reduce carbon emissions and mitigate climate change. In developing nations such as Mongolia, second-hand hybrid electric vehicles (HEVs) have emerged as a practical solution due to their relatively low cost and high fuel efficiency. However, the widespread adoption of these vehicles presents a critical challenge: the degradation of rechargeable batteries. Mongolia’s extreme climate conditions, with sharp seasonal temperature variations, further accelerate this deterioration, shortening battery lifespan and reliability. Over the past 15 years, rechargeable battery technology has played a central role in the transportation sector. Today, many of the batteries used in HEVs and even some in EVs have reached advanced stages of aging. As a result, increasing numbers are being discarded, raising both economic and environmental concerns. This trend underscores the urgent need to extend the usable life of aged batteries through reuse, which depends on accurately determining their state of charge (SOC) and state of health (SOH). In aged batteries, internal state parameters degrade significantly, thereby limiting the effective utilization of available energy and increasing the risk of overcharging and over discharging. Consequently, accurate determination of the battery state of charge, along with module level equalization within the battery pack, is essential to ensure stable and reliable battery operation. Conventional SOC and SOH estimation methods, however, were primarily designed for new batteries. Furthermore, effective battery module equalization solutions specifically designed for second-life hybrid electric vehicles are largely absent, making it difficult to ensure balanced performance and long-term reliability under extreme environmental conditions. Their accuracy declines significantly for aged batteries, their implementation is often complex, and their practical applicability in real-world conditions remains limited. These shortcomings highlight the necessity for new approaches tailored to the challenges of aging batteries operating under extreme climates. This paper proposes a novel SOC and SOH observation method specifically designed for second-hand HEVs operating under extreme environmental conditions. The proposed approach employs multiple battery parameters including current, voltage, temperature, internal resistance, and capacity to enhance estimation accuracy while maintaining computational and operational simplicity. In addition, a battery equalizer circuit is introduced to support maintenance by enabling full charge equalization of battery packs and improving the efficiency of service procedures. While the SOH estimation method is validated through experimental analysis, the battery equalizer is evaluated solely through simulation. The integrated approach provides a practical and reliable solution for battery health monitoring and maintenance, thereby enhancing performance and supporting the sustainable use of HEVs in extreme climate regions. In this context, an evaluation of 14 HEV battery modules revealed significant degradation, with SOC values decreasing by up to 65.8 % and SOH values declining by no less than 50.2 % relative to nominal conditions.</p>