China\'s Battery Recycling Industry: Poised for Exponential Growth Amid Regulatory Push

As industrial development accelerates globally, overseas markets have become a critical battleground for electric vehicle (EV) battery manufacturers. The steady growth in global new energy vehicle production and market penetration has triggered sustained explosive demand for lithium-ion batteries in international markets. Since 2023, Chinese domestic battery manufacturers have accelerated their international market expansion, scaling up overseas production and research and development operations. Compared to foreign competitors, China maintains a relatively complete battery supply chain ecosystem, with enterprises enjoying competitive advantages in cost, technology, and scale—factors that make international automakers increasingly willing to partner with Chinese battery suppliers.

According to reporting by People's Daily, citing statistics from China's Ministry of Public Security, the nation's new energy vehicle fleet reached 31.4 million units by the end of 2024. New registrations in 2024 totaled 11.25 million vehicles, representing an increase of 3.82 million units compared to 2023—a remarkable 51.49% year-over-year growth.

Research firm EVTank, in collaboration with the Ivy Economic Research Institute, released the "White Paper on China's Lithium-ion Battery Recycling, Dismantling and Cascade Utilization Industry Development (2025)" (hereinafter "the White Paper"), which indicates that based on corporate planning targets, China's lithium-ion battery recycling capacity will reach 11.092 million tons annually by 2030. EVTank projects that by 2030, China's lithium-ion battery recycling volume will reach 4.246 million tons.

China's new energy vehicle power batteries have entered a phase of large-scale retirement, making comprehensive enhancement of battery recycling and utilization capabilities particularly crucial.

Policies Promote the Development of the Battery Recycling Industry

Previously, China's Ministry of Industry and Information Technology (MIIT) and other departments mandated that starting in 2016, passenger vehicle manufacturers must provide warranty coverage of at least eight years or 120,000 kilometers for critical components including batteries and motors. This "eight-year threshold" has further accelerated the transition of power batteries toward retirement and recycling.

Data released by China's New Energy Vehicle Power Battery Recycling and Utilization Industry Collaborative Development Alliance shows that in 2023, the nation generated 168,000 tons of retired power batteries, a 78.3% year-over-year increase. Of this total, decommissioned new energy vehicles contributed 145,000 tons of retired batteries, while vehicle maintenance operations generated 23,000 tons.

Concurrently, China's new energy battery recycling and utilization capacity has expanded rapidly, with comprehensive utilization reaching 825,000 tons in 2023. The "China New Energy Battery Recycling and Utilization Industry Development Report (2024)" reveals that as of the end of October 2024, authorities have selected and cultivated five batches totaling 148 compliant enterprises, establishing 10,000 collection service points across 327 prefecture-level administrative regions nationwide, essentially achieving comprehensive collection coverage and initially forming a diversified recycling network.

According to Li Li, Vice President of the China Association of Industrial Energy Conservation and Clean Production, the State Council's executive meeting deployment on improving the new energy vehicle power battery recycling and utilization system sends a clear signal of accelerated development in the power battery recycling and utilization industry.

In fact, as retired battery volumes rapidly increase, supportive policies have been continuously implemented. In December 2024, responding to new industry developments, China's MIIT revised and released the "Industry Standard Conditions for Comprehensive Utilization of Waste Power Batteries from New Energy Vehicles (2024 Edition)," which took effect January 1, 2025.

As the top-level design for waste power battery comprehensive utilization, these standards raise industry entry barriers across multiple dimensions, helping guide rational industrial layout, promote technological innovation and upgrades, and ensure standardized industry development.

Specifically, the Standard Conditions establish concrete requirements for enterprise registered capital, paid-in capital, and production capacity, while introducing more detailed requirements for cascade utilization and regenerative utilization. Additionally, the standards incorporate requirements for R&D expenditure as a percentage of waste power battery comprehensive utilization business revenue, encouraging enterprises to actively pursue high-tech enterprise certification and continuously improve technological and process capabilities.

Market Prospects of the Power Battery Recycling Industry

Industry consensus suggests that the power battery recycling industry stands on the eve of explosive growth, with promising development prospects coexisting alongside significant real-world challenges.

On one hand, the power battery recycling market is poised for rapid expansion. Wang Xiaokang, President of the China Association of Industrial Energy Conservation and Clean Production, previously indicated that by 2030, China's cumulative retired power and energy storage batteries will exceed 3 million tons. China's power battery recycling market is projected to reach over 140 billion yuan ($19.3 billion), representing potential growth of more than 9-fold, possibly reaching 10-fold, compared to 2022's actual market scale.

Guorong Securities believes that as early-generation new energy vehicles and power batteries approach retirement, the power battery recycling industry is positioned to experience its first explosive growth period.

Challenges Facing the Battery Recycling Industry

Conversely, the power battery recycling industry remains in its nascent stages, confronting challenges including incomplete standard systems, fragmented collection channels, and environmental and safety risks.

Current power battery recycling and utilization primarily encompasses two categories: cascade utilization and regenerative utilization. Generally, when battery capacity ranges from 50% to 80%, retired power batteries undergo disassembly and restructuring for cascade utilization, continuing service as emergency power sources. When battery capacity falls below 40%, retired batteries undergo disassembly, crushing, and other processing to extract lithium, cobalt, nickel, and other raw materials, being "regenerated" into new batteries. Clearly, both cascade and regenerative utilization impose significant technical requirements on practitioners.

However, some "small workshops" continue operating in "gray areas." Jiang Jiuchun, Chief Scientist at Beijing Institute of Technology Shenzhen Automotive Research Institute, noted at the Second Power Battery Quality and Safety Conference that after retirement, some batteries are illegally modified into refurbished batteries and re-entered into markets, creating safety risks. A State Council Development Research Center report indicates that as of end-2023, China's standardized recycling rate for new energy vehicle power batteries remained below 25%.

Furthermore, battery specifications, coding, and traceability systems have not been fully unified, with significant differences among various brands and models increasing the difficulty of retired battery disassembly and reutilization.

Given this context, improving the new energy vehicle power battery recycling and utilization system is imperative.

Current Status of the Battery Recycling Industry at Home and Abroad

Regarding overseas enterprises, recently Toyota Tsusho and LG Energy Solution reached an agreement to establish a joint venture for automotive power battery recycling in North Carolina, United States.

The new company will crush and sort battery waste, extract valuable metals including nickel, cobalt, and lithium, and establish a supply chain that recycles materials back into new battery production, with operations expected to commence in 2026.However, enterprises entering the lithium battery recycling sector have not all enjoyed smooth sailing.

Reports indicate that on June 10, Li-Cycle Holdings Corp., once dubbed "North America's Battery Recycling King," announced it was seeking bankruptcy protection in Canada to protect itself and its North American subsidiaries.

Company data shows that as of July 2023, Li-Cycle had established 10,000 tons of annual battery recycling capacity in North America and secured long-term supply agreements with General Motors-LG Chem joint venture Ultium Cells, LG Energy Solution, and others. However, by March 2024, its business expansion encountered obstacles, and by 2025, it had successively filed for bankruptcy protection in both the United States and Canada.

Charts demonstrate the publication share across different countries for various cathode materials research. China's emphasis on LFP batteries reflects their widespread adoption domestically, while in other countries including South Korea, the United States, Japan, and Germany, NMC batteries dominate due to their prevalence in electric vehicle applications. Additionally, the recovery of end-of-life LCO batteries from electronic devices has driven LCO battery recycling research, particularly evident in India and Japan.

CATL Achieves Remarkable Success in Battery Recycling

Returning to Chinese enterprises, CATL, the largest power battery manufacturer, has achieved notable success in recycling. At the 2024 Davos World Economic Forum, Chairman Robin Zeng discussed CATL's current technology capabilities, achieving an impressive 99.6% recovery rate for nickel, cobalt, and manganese, essentially eliminating the need for additional metal mining. CATL's lithium recovery rate reaches 91%. CATL's subsidiary Guangdong Brunp recycled 100,000 tons of waste batteries in 2023, extracting 13,000 tons of lithium carbonate—approximately one-tenth of China's lithium carbonate imports.

Even for CATL, this recycling volume remains significantly below both its own shipment volumes and current market waste generation levels.

Following the official implementation of the Standard Conditions, the industry anticipates that power battery recycling may finally experience its long-awaited renaissance.