The wave of “retirement” for power batteries is approaching. With the increasing number of new energy vehicles (NEVs) in China, the need for safe and efficient recycling of these batteries has become urgent.
Recently, the National Development and Reform Commission, along with two other departments, issued the “Implementation Rules for the 2025 Subsidies for the Update of New Energy City Buses and Power Batteries.” This policy provides substantial subsidies for urban bus companies that update their fleets and replace power batteries. For vehicles that replace their power batteries, an average subsidy of 42,000 yuan is available. This initiative directly boosts the development of the power battery recycling industry.
As of now, the number of NEVs in China has surpassed 31.4 million, indicating that a significant number of batteries will soon reach their 8-year lifespan and require retirement. The China Electronic Energy Saving Technology Association’s Battery Recycling Utilization Committee predicts that by 2025, the volume of retired power batteries in China will reach 820,000 tons, and by 2028, it will exceed 4 million tons. The market value of the battery recycling industry is projected to surpass 280 billion yuan.
As the industry transitions to a more rational development phase, the growth rate of battery production capacity is slowing down. According to regulations from the Ministry of Industry and Information Technology, since 2016, passenger car manufacturers have been required to provide an 8-year or 120,000 km warranty for core components like batteries. Many car owners are now facing the issue of battery retirement as they approach this warranty expiration. Public transport companies are also struggling with battery recycling due to insufficient battery endurance, high replacement costs, and decreasing subsidies.
Data from the China Automotive Power Battery Industry Innovation Alliance indicates that the cumulative sales of power batteries and other batteries in China will reach 1,039.5 GWh in 2024, reflecting a year-on-year growth of 42.4%. Currently, the national power battery production capacity has exceeded 1,800 GWh. By guiding the replacement of old batteries through subsidy policies, excess capacity can be effectively absorbed, optimizing resource allocation.
Power batteries serve as the “heart” of NEVs, with components such as metals, positive electrodes, negative electrodes, and separators that can be recycled. Industry experts refer to retired power batteries as “urban mines,” highlighting their significant recycling value. The question now is, how can we safely and efficiently recycle these retired batteries?
Battery performance declines with increased charging cycles. Once the battery capacity drops below 80% of its rated capacity, it is no longer suitable for electric vehicles and must be recycled. After processing, these old batteries can be repurposed and made useful again. They can be reused in applications where energy density requirements are lower, such as in electric scooters, solar streetlights, or energy storage devices. Additionally, when the battery capacity falls below 40%, metals such as cobalt, nickel, and lithium can be extracted for the regeneration of new batteries.
A report from research organizations EVTank and the China Battery Industry Research Institute indicates that by 2024, the actual recycling volume of used lithium-ion batteries in China will be 654,000 tons, reflecting a modest year-on-year increase of 5.0%. However, due to fluctuations in raw material prices, the overall market size for recycled lithium-ion batteries has seen a 31.0% year-on-year decline to 8.66 billion yuan. Looking ahead, EVTank predicts that the recycling volume of lithium-ion batteries in China will reach 4.246 million tons by 2030.
Regarding capacity construction, EVTank’s data shows that by the end of 2024, China’s white-listed capacity for cascading utilization and recycling of lithium-ion batteries will reach 4.233 million tons per year. This includes a cascading utilization capacity of 2.042 million tons and a recycling and dismantling capacity of 2.191 million tons. The growth rate of the entire industry’s capacity has significantly slowed compared to before 2023, indicating a transition to more rational development. According to various enterprise plans, by 2030, China’s lithium-ion battery recycling capacity is expected to reach 11.092 million tons per year.
In the face of these challenges, industry experts highlight the importance of establishing a comprehensive recycling system. Professor Liu Zimin from the School of Economics and Management at Southwest University emphasizes that the recycling of power batteries is crucial due to the rich resources of lithium, cobalt, and nickel they contain. Effective recycling can alleviate the pressure on upstream resource expansion and reduce dependence on critical mineral resources.
However, the process of recycling retired batteries poses public safety and environmental protection concerns. Improper handling of batteries, which contain various metals and chemicals, can lead to fires, explosions, and environmental pollution. To regulate the recycling market and avoid safety incidents, the Ministry of Industry and Information Technology has published five batches of a “white list” from 2018 to 2023, identifying companies that meet the recycling and disposal qualification criteria. A total of 156 companies were selected, although only 12 of these companies possess both cascading utilization and recycling qualifications.
Despite the rapid development of the recycling market, the actual recycling rate of NEV power batteries in China remains below 25%, and the industry still faces challenges such as insufficient recycling channels. Many legitimate recycling companies adhere to standards but struggle to achieve profitability, while some “black workshops” and small enterprises exploit lower costs and inadequate environmental practices for higher profits. This disparity between the “white list” and “black workshops” has become a growing concern within the industry.
The battery recycling industry is vast, yet it is impacted by fluctuations in the prices of battery raw materials. For instance, the price of battery-grade lithium carbonate was around 600,000 yuan per ton in 2022 but has dropped below 100,000 yuan per ton since 2024, making the use of recycled batteries less financially viable. Yu Xiaolong, deputy editor of the Lithium Research Institute, notes that limited profits, combined with low barriers to entry and numerous companies, has left many recycling enterprises with only marginal profits or facing losses. In this context, the implementation of a closed-loop recycling mechanism for lithium batteries is crucial for reducing the space for “black workshops” and bringing standardized recycling into a more regulated path.
China has gradually established a producer responsibility extension system for battery recycling, which holds manufacturers accountable for the entire lifecycle of their products. Power battery manufacturers and automotive companies are required to build or entrust third-party organizations to create a waste battery recycling system, forming a closed-loop system of “from where it came, back to where it goes.” With advancements in digital traceability technology, companies have begun equipping power batteries with “digital identities” through QR codes and other data carriers, allowing for end-to-end traceability throughout production, sales, dismantling, and utilization. This approach effectively regulates the entire battery recycling chain and enhances oversight of illegal recycling practices.
As China enters a large-scale “retirement” phase for power batteries, enhancing the capacity for recycling and utilization becomes increasingly important. Technological innovation is a key driver for industry upgrades. The battery recycling sector has attracted numerous enterprises. According to data from Qichacha, there are currently 172,000 battery recycling-related companies in China, with over 60% established within the last three years. Companies involved in battery recycling primarily include battery manufacturers, automotive companies, and material suppliers. Leading enterprises in various sectors have improved their battery recycling strategies.
For example, CATL, a global leader in power battery production, has established a closed-loop system of “battery—production—recycling—material regeneration” and collaborates with automotive manufacturers to create a recycling network. BYD, a leader in China’s NEV sector, has set up over 40 power battery recycling points nationwide, building a comprehensive “dismantling—recycling—regeneration” capability. Ganfeng Lithium, a leading player in battery recycling, focuses on hydrometallurgy and the extraction of recycled materials, achieving a recovery rate exceeding 98% for nickel and cobalt, with an annual recycling capacity exceeding 5,000 tons.
As 2024 marks a critical juncture for the first batch of NEV batteries reaching their warranty expiration, the rollout of numerous policies demonstrates China’s commitment to the battery recycling industry. This will promote regulatory development and legal construction, pushing the entire battery recycling sector into a new phase. Notably, the revised “Industry Norms for the Comprehensive Utilization of Waste Power Batteries from New Energy Vehicles (2024 Edition)” published by the Ministry of Industry and Information Technology in December 2024 calls for companies to establish quality assurance mechanisms that ensure product traceability and accountability, as well as to implement mandatory standards for recycled products to enhance quality.
In February of this year, the State Council’s executive meeting approved the “Action Plan for Improving the Recycling and Utilization System of Power Batteries for New Energy Vehicles.” This plan aims to strengthen management across the entire chain, address bottlenecks, and build a standardized, safe, and efficient recycling system. The process of collecting, transporting, dismantling, and reusing retired batteries is highly complex, and particularly requires supervision and management to regulate industry development. Liu Zimin emphasizes that the future requires the creation of a closed-loop operational system and the establishment of a robust recycling mechanism to better activate the market. Additionally, ongoing development of relevant policies and regulations is necessary to strengthen oversight throughout the battery recycling process, utilizing legal measures to standardize the recycling industry and promote sustainable, high-quality development.
