The market for power batteries is set to experience a significant “explosion”. As of now, the power batteries for new energy vehicles (NEVs) in China have entered a large-scale retirement phase. In February, the State Council reviewed and approved the “Action Plan for Improving the Recycling and Utilization System for New Energy Vehicle Power Batteries.” The meeting emphasized the importance of enhancing the recycling and utilization capabilities of power batteries, strengthening management across the entire chain, addressing bottlenecks, and establishing a standardized, safe, and efficient recycling system.
Recently, Guoxuan High-Tech and Jin Jing New Energy have reached a strategic collaboration for battery recycling. Leveraging Jin Jing New Energy’s over 60 service points globally and Guoxuan High-Tech’s anticipated annual battery production capacity of approximately 300 GWh, the two companies aim to establish a comprehensive system for lithium battery sales, after-sales services, and recycling.
According to Bloomberg, CATL is in negotiations with various parties to establish battery recycling operations in Europe. It is reported that CATL’s battery factory in Hungary is set to commence production in 2025, with an initial goal of achieving an annual capacity of 40 GWh, which is expected to expand to 100 GWh in the future. CATL stated, “Establishing a recycling business will help alleviate environmental concerns regarding battery production and disposal. We aim to create a closed-loop system from manufacturing to recycling.”
Industry data indicates that by the end of 2024, the number of NEVs in China will exceed 31.4 million, and the number of retired power batteries is also increasing yearly. As early-installed power batteries reach their end of life, the recycling market is on the verge of significant growth. This creates a blue ocean market valued at over 100 billion yuan, attracting numerous companies to invest. In 2024 alone, the number of newly registered battery recycling-related companies is expected to exceed 40,000, highlighting the market’s vibrancy.
Opportunities and Challenges in the Market
“As early NEVs and power batteries approach retirement, the power battery recycling industry is poised to enter its first explosive growth phase.” According to Guorong Securities, from 2014 to 2018, NEV sales in China grew from 75,000 to 1.256 million units, surpassing one million for the first time. During the same period, the installed capacity of power batteries jumped from 3.7 GWh to 56.9 GWh, an increase of over 15 times. Industry statistics show that by 2024, approximately 600,000 tons of retired power batteries will be generated in China.
As the world’s largest lithium battery producer, China has a high dependence on foreign sources for materials like nickel, cobalt, and lithium. Industry experts indicate that retired batteries are a crucial source of raw materials needed for the production of new batteries. Developing the power battery recycling industry is vital for easing the pressure on upstream resources and reducing reliance on critical mineral resources, which is significant for China’s resource strategic security and circular economy development.
Currently, China’s power battery recycling industry is already quite large, with over 195,000 battery recycling-related enterprises in operation. However, many of these companies are of mixed quality, with the number of legitimate operators falling far short of those operating outside regulations.
According to a survey by the State Council Development Research Center, as of 2023, the standardized recycling rate of power batteries for new energy vehicles in China is less than 25%. Although thousands of battery recycling-related companies are registered annually, only 156 are on the “white list”. Some second-hand dealers and small workshops hold large quantities of waste batteries, leading to underutilization of capacity among mainstream recycling enterprises.
Achieving Resource Self-Sufficiency
According to national policy requirements, the power battery recycling industry currently follows the “producer responsibility system,” adhering to the principle that those who produce are responsible. Industry organizations categorize the domestic battery recycling market into three main types: vehicle manufacturers like BYD primarily conducting battery recycling; battery companies like CATL leading battery recycling efforts; and recycling companies like GEM focusing on battery recovery.
Typically, vehicle manufacturers often establish joint ventures with third-party platforms to jointly engage in battery recycling, cascading usage, and regeneration. For instance, BYD collaborates with GEM to promote a circular system encompassing “material regeneration – battery regeneration – NEV manufacturing – power battery recycling”; Changan Automobile established a joint venture for battery recycling last year to create a recycling and utilization industry for retired batteries.
CATL Chairman Zeng Yuqun mentioned at an industry forum that as early as 2023, “we recycled 100,000 tons of waste batteries and produced 13,000 tons of lithium carbonate, achieving a lithium recovery rate of 91.0%, with nickel, cobalt, and manganese recovery rates also reaching 99.6%.” Currently, CATL has the capacity to process 270,000 tons of waste batteries, with plans to expand this capacity to one million tons in the future.
Yiwei Lithium Energy is also actively fulfilling its corporate responsibilities, having established a full life-cycle value chain and green supply chain from “nickel, cobalt, lithium ore battery materials – battery recycling – battery regeneration.” In addition, numerous battery manufacturers, including A123 Systems, Honeycomb Energy, and others, are broadly engaging in the power battery recycling sector.
As a professional recycling company, GEM has revealed that it has established targeted recycling partnerships with over 750 domestic and international vehicle manufacturers and battery producers. The company has built seven power battery recycling processing centers in China, South Korea, and Indonesia, processing over 10% of retired power batteries globally. GEM plans to increase its battery recycling volume to over 300,000 tons by 2026.
In the coming years, the volume of retired power batteries is expected to grow rapidly. Industry analysts predict that by 2025, China’s retired power battery volume will reach 820,000 tons, and after 2028, it will exceed 4 million tons, with the battery recycling market value projected to surpass 280 billion yuan. In the future, China’s battery recycling capabilities will also significantly improve. Zeng Yuqun forecasts that by 2042, China will no longer need to rely on new lithium ore mining, achieving self-sufficiency in circular resources.
