Every day, tens of millions of pure electric vehicles travel along urban roads. Beneath these vehicles, a power battery pack weighing several hundred kilograms is typically installed flat under the chassis, providing the energy needed for driving.

Like the batteries commonly used in everyday life, power batteries also need to be recycled after they are retired from service. The difference is that power batteries operate at high voltage, have large capacities, and contain significant amounts of lithium. Some batteries also contain nickel and cobalt, and their residual energy is far greater than that of ordinary batteries. Once they enter informal channels and are illegally refurbished, roughly dismantled, or improperly stored, they may not only cause fires and explosions but also contaminate soil and water.

As China’s new energy vehicle fleet has grown rapidly, the power batteries installed in the early years are now beginning to reach the end of their service life in large numbers. In 2025, China’s comprehensive utilization volume of retired new energy vehicle power batteries exceeded 400,000 tonnes.

More power batteries will need to be recycled in the future. According to the latest official data, by the end of June this year, China’s total number of new energy vehicles had reached nearly 50 million (48.97 million). Newly registered new energy vehicles accounted for nearly half of all new vehicle registrations. According to estimates by relevant research institutions, by 2030, China is expected to generate more than 1 million tonnes of retired power batteries annually.

At both the national and local levels, support for the recycling and utilization of retired power batteries is becoming increasingly stronger. Starting in April 2026, the Ministry of Industry and Information Technology’s Interim Measures for the Administration of the Recycling and Comprehensive Utilization of Retired Power Batteries from New Energy Vehicles (hereinafter referred to as the Interim Measures) came into effect. The measures require that when a vehicle itself is scrapped, its power battery must also enter the scrappage process.

Beijing’s Several Measures on Encouraging the Standardized and Healthy Development of Enterprises Engaged in the Recycling and Utilization of Waste Power Batteries also completed public consultation on August 13. The policy will provide multiple forms of subsidies for waste power battery recycling and utilization. For example, recycling processes may be included in municipal pilot platforms, and eligible projects may receive subsidies covering 35% of total investment, with a maximum fixed-asset investment subsidy of 100 million yuan.

Where did the enormous volume of retired power batteries go in the past, and where will they go in the future?
01 The End of Cascade Utilization: Batteries Will Move Directly to Dismantling and Recycling

The actual service life of power batteries is affected by factors such as battery type, operating conditions, temperature, and charging and discharging strategies. Batteries may retire from vehicle use either when the entire vehicle reaches the end of its service life or earlier due to capacity degradation, faults, or other issues.

In terms of cycle life, the national standard currently under revision requires that power batteries maintain a discharge capacity of no less than 92% of their initial capacity after 500 standard cycles, and no less than 85% after 1,000 cycles.

In the past, retired power batteries mainly had two destinations: one was continued use by exploiting their remaining performance; the other was dismantling and recycling to extract metals such as lithium, nickel, and cobalt.

When power batteries are removed from vehicles, they have not necessarily completely lost their value. They may simply no longer meet the requirements of automobiles in terms of capacity, power output, or safety performance. The industry therefore proposed transferring these batteries to scenarios with lower performance requirements after testing, sorting, and repackaging. This approach was known as “cascade utilization.”

Low-speed electric vehicles, telecommunications base stations, and energy storage systems were once major application scenarios for cascade utilization. However, retired batteries come from diverse sources, with differences in specifications, capacity, and aging conditions, making cascade utilization difficult to implement in practice. More seriously, some batteries entered the market illegally after simple refurbishment without proper testing or safety certification.

In June 2026, CCTV Finance reported that approximately 33% of electric bicycle fires were caused by illegally modified batteries. Among these modified batteries that caught fire, about 80% of the battery cells came from retired power batteries of new energy vehicles.

Wang Peng, director of the Department of Energy Conservation and Comprehensive Utilization under the Ministry of Industry and Information Technology, previously stated that the quality of cascade utilization battery products on the market varies widely. Some comply with standards, while others do not. Therefore, the Interim Measures, which took effect in April 2026, no longer use the concept of “cascade utilization.”

On July 30, 2026, the Ministry of Industry and Information Technology issued the Announcement on the Abolition and Revision of Relevant Policies, Standards, and Industry Regulations Concerning “Cascade Utilization” of Retired Power Batteries from New Energy Vehicles, marking the end of cascade utilization at the policy level.

This means that more retired power batteries will directly enter the dismantling and recycling stage. After discharge, dismantling, crushing, and sorting, metals such as lithium, nickel, cobalt, and manganese will be extracted through processes including hydrometallurgy and reused in battery production.

Cui Dongshu, secretary-general of the China Passenger Car Association, told The Intellectuals that the current mainstream technical route in China’s power battery recycling industry combines physical dismantling pretreatment with hydrometallurgy. Physical crushing and sorting serve as the fundamental preliminary process for all recycling methods. Through discharge, crushing, and screening, copper and aluminum current collectors are separated from cathode powder materials, with industry adoption approaching 100%.

Hydrometallurgy is the dominant core process, accounting for more than 70% of market capacity. It relies on acid and alkaline leaching and solvent extraction to separate metals such as nickel, cobalt, lithium, and manganese. The comprehensive material recovery rate can reach 98%, and the purity of recycled metals meets power battery manufacturing standards. It can be applied to both ternary lithium batteries and lithium iron phosphate batteries. Leading companies such as Brunp and GEM use this as their core production technology.

“Pyrometallurgy is only a niche supplementary process because of high lithium losses and significant carbon emissions. Emerging technologies such as direct regeneration of cathode materials and bio-metallurgy remain at the pilot-testing stage and have not yet achieved large-scale commercial deployment,” Cui Dongshu said.

02 The Challenges of Recycling

Power battery recycling is first and foremost a matter of public safety. Xia Yiwen, manager of the Zero Carbon Transportation Program at Greenpeace, told The Intellectuals that high-energy-density batteries are prone to thermal runaway during improper dismantling, which can trigger fires or explosions while releasing fluorinated organic solvents and volatile toxic gases. If metal ions from electrolytes and cathode and anode materials enter soil and water bodies without proper treatment, they may also create long-term ecological risks.

More importantly, the actual carbon reduction benefits of new energy vehicles also depend on the recycling of power batteries. Vehicle electrification does not mean the disappearance of carbon emissions. The production and manufacturing chains of electric vehicles and power batteries themselves also generate substantial carbon emissions.

As the global new energy vehicle market expands rapidly, demand for power batteries continues to rise. According to forecasts by the International Energy Agency (IEA), global electric vehicle battery deployment is expected to reach approximately 1.2 terawatt-hours in 2025 and nearly 3 terawatt-hours by 2030. Demand for critical minerals such as lithium, nickel, and cobalt will also increase accordingly. If battery production continues to rely primarily on newly mined resources, the energy consumption and carbon emissions associated with mining and processing will continue to grow.

In addition, Wang Yingying, head of Bocui Circular, previously noted that expanding battery production capacity typically takes only one to two years, whereas building a new mine—from exploration and approval to production—often takes five to ten years. Resource supply therefore struggles to keep pace with rapidly changing market demand.

For this reason, major economies around the world have elevated power battery recycling to the level of resource security strategy in recent years. They hope to establish closed-loop recycling systems that can transform retired batteries into “urban mines,” reducing dependence on primary mineral resources and strengthening the resilience of critical resource supply chains.

China has already built the world’s largest power battery recycling industry. Xia Yiwen said that China’s power battery recycling and reuse sector accounts for more than 60% of the global market, while also facing multiple challenges.

According to the White Paper on the Development of China’s Lithium-ion Battery Recycling, Dismantling and Cascade Utilization Industry (2025), by the end of 2024, China’s “white-listed” lithium-ion battery cascade utilization and recycling dismantling capacity had reached 4.233 million tonnes per year, an increase of 11.6% year-on-year. However, China’s actual recycling volume of retired lithium-ion batteries in 2024 was only 654,000 tonnes, representing an annual increase of just 5%.

“Based on the ratio of actual recycling volume to nominal recycling capacity, the industry’s average capacity utilization rate is only around 15%, less than one-fifth,” Xia Yiwen said.

A large number of batteries have not entered formal recycling channels. At present, there is no officially recognized industry-wide recycling rate. According to a review of different statistics and industry assessments compiled by Greenpeace, the proportion is roughly estimated to be between 20% and 50%. Some batteries are intercepted by higher-paying informal operators during stages such as repair shops, used-car markets, and end-of-life vehicle dismantling facilities.

Idle capacity is also the result of a mismatch between supply and demand. Xia Yiwen pointed out that retired batteries are mainly concentrated in China’s eastern coastal regions, while recycling capacity is more heavily concentrated in central provinces. The transportation of power batteries has relatively strict safety requirements. This geographic mismatch between battery sources and recycling facilities increases transportation costs and reduces the operating rates of some plants.
03 Why Has Disorder Emerged in Battery Recycling?

An incomplete regulatory system, recycling prices, accessibility of recycling channels, and consumers’ awareness of proper disposal have all contributed to the difficulties facing the power battery recycling industry.

Formal recycling companies must bear substantial compliance costs, including hazardous waste transportation, safe dismantling, environmental protection facility construction, and environmental and safety assessments. By contrast, some informal recycling operators rely on methods such as “high-price purchasing, cash payments, and door-to-door collection” to quickly attract battery supplies.

“Some companies, in order to seize market share or meet financing and listing requirements, have adopted high-premium competitive strategies. Their quotations are often 10% to 15% higher than the normal profit levels of compliant enterprises,” Xia Yiwen said.

She also pointed out that in transportation and storage, retired power batteries are classified as Category 9 dangerous goods. Their transportation must comply with hazardous materials management requirements, and freight costs per kilometer are 50% to 100% higher than ordinary cargo transportation. In terms of environmental protection and safety investment, fixed-asset investment in environmental protection facilities accounts for approximately 5% to 8% of the total costs of comprehensive utilization enterprises, while dismantling and crushing processes cost 10% to 20% more than those of small informal workshops.

Squeezed between high recycling prices and high compliance costs, legitimate companies generally face significant operational pressure. Yet driven by financial incentives, repair shops, intermediaries, and some consumers often prefer to sell retired power batteries to whichever buyer offers the highest price.

In Cui Dongshu’s view, the low economic return for ordinary consumers when recycling batteries is a major issue. The core problem lies in pricing. Intermediate circulation points lack strict controls, and once batteries leave the regulated chain, it becomes extremely difficult for them to return to the formal recycling system. This directly results in significant resource losses and prominent environmental risks.

He also believes that the current Extended Producer Responsibility (EPR) system lacks sufficient enforcement power. Full-life-cycle battery coding and traceability mechanisms have not been fully implemented, and vehicle repair, battery replacement, and end-of-life vehicle disposal processes do not yet require batteries to be returned specifically to vehicle manufacturers or qualified recycling companies.

Compared with formal enterprises, some informal recycling operators place greater emphasis on “rapid monetization.”

Batteries with relatively high remaining capacity can undergo simple testing, regrouping, and repackaging before re-entering markets such as electric bicycles and small-scale energy storage systems under labels such as “salvaged vehicle batteries” or “cascade-use batteries.” Batteries with lower residual value are directly dismantled, with copper, aluminum, lithium, nickel, cobalt, and other economically valuable materials quickly separated and sold. This process avoids many safety inspections, environmental treatment procedures, and standardized dismantling requirements, allowing operators to recover cash through lower costs and shorter processes.

However, the industry generally believes that with the formal implementation of the Interim Measures in 2026, the issue of where retired batteries go will gradually improve.

The measures require, for the first time in the form of departmental regulations, that power battery companies and new energy vehicle manufacturers assume recycling responsibilities. Vehicle repair companies, battery-swapping operators, and end-of-life vehicle dismantling enterprises must transfer retired power batteries to designated recycling outlets or comprehensive utilization companies and report relevant information through the national traceability platform. Regulatory authorities may impose penalties for failing to transfer batteries as required, failing to fulfill recycling responsibilities, or failing to submit required information.

04 How Can Batteries Be Returned to Formal Recycling Channels?

Industry experts generally believe that implementing and strengthening the Extended Producer Responsibility (EPR) system, while clearly defining and fully utilizing the roles of both automobile manufacturers and battery manufacturers as responsible parties, is the key to building a healthy power battery recycling system.

“To address the upcoming wave of retired power batteries, improving institutional supervision and regulatory systems is the most urgent task at present,” Cui Dongshu said. In the short term, it is necessary to strengthen full-life-cycle traceability management for batteries, implement mandatory closed-loop controls over battery flows at auto repair shops and end-of-life vehicle facilities, and curb diversion into informal markets. The immediate priority is to solve the fundamental problem facing legitimate companies: having “no batteries available to collect.”

In the medium term, recycling technologies need to be upgraded. The industry should move beyond simply extracting metals and transition toward automated, efficient dismantling combined with direct regeneration of cathode materials. This would eliminate the need for intermediate precursor reconstruction, reduce energy consumption and wastewater treatment costs, and improve the economic competitiveness of recycled materials.

In the long term, the industry needs to promote battery designs that are more compatible with recycling from the source. This includes standardizing module structures, simplifying locking mechanisms, and differentiating battery categories to reduce the difficulty of automated sorting and dismantling at the recycling stage. “All three areas need to advance simultaneously,” Cui Dongshu said.

Xia Yiwen also noted that recycling requirements should be integrated into product design from the beginning. Recycling companies currently report widespread problems, including complex battery-pack structures, extensive use of adhesives and welding processes, and inconsistent specifications and dimensions, all of which significantly increase dismantling difficulty and recycling costs. Automobile manufacturers and battery producers should strengthen cooperation with recycling companies and, while ensuring product safety and economic viability, promote battery designs that are easier to dismantle and recycle, improving recycling efficiency at the source.

For consumers, finding formal recycling channels also remains a challenge. For most vehicle owners, the process from vehicle repair and battery replacement to final vehicle scrappage involves multiple steps, including finding recycling channels, comparing prices, understanding procedures, and arranging transportation and delivery.

According to recent consumer surveys, 48% of respondents said they did not know whom they should give retired power batteries to for recycling. Some experts have also pointed out that whether consumers choose formal recycling channels depends not only on the level of subsidies but, more importantly, on whether the entire system is sufficiently transparent, convenient, and trustworthy.

Xia Yiwen suggested that after the implementation of the Interim Measures, the requirement for vehicle bodies and power batteries to be scrapped together has become mandatory. Therefore, ordinary vehicle owners should ensure that their vehicles and power batteries are handed over together to qualified end-of-life vehicle dismantling enterprises for proper disposal, rather than to unlicensed recyclers such as informal middlemen. At the same time, consumers can pay attention to and encourage automobile companies to publicly disclose the recycling destinations and treatment processes of retired power batteries, thereby creating greater public oversight.

Editor: Zhiyu Wang