China’s power battery recycling industry is facing stricter regulations.
Recently, six departments, including the Ministry of Industry and Information Technology (MIIT), jointly issued the “Interim Measures for the Management of Recycling and Comprehensive Utilization of Waste Power Batteries from New Energy Vehicles” (hereinafter referred to as the “Measures”), which will take effect on April 1, 2026.
Wu Huihui, a battery recycling analyst at Shanghai Steel Union’s New Energy Business Unit, told Jiemian News that the “Interim Measures” mainly enhance legal binding force, strengthen supervision and management of power battery recycling, effectively guide the flow of waste power batteries, and curb irregular activities such as illegal dismantling.
Wu Huihui pointed out that the “Interim Measures” will promote the standardized development of the waste power battery recycling market and strictly require enterprises to meet certain operating conditions. Starting from the source of the battery, the MIIT will work with relevant departments to establish an information platform to collect necessary information such as power battery codes, product categories, product composition, and end-of-life recycling, generating a unique and dynamic digital ID for each power battery pack to support the supervision and management of the entire power battery chain. For enterprises involved in new energy vehicle production, power batteries, battery swapping services, motor vehicle repair, and the recycling and dismantling of scrapped motor vehicles, the measures detail the requirements for collecting traceability information, dismantling and dismantling technical support information, and upload timelines.
“From the generation and use of battery packs to recycling and dismantling, every step will be transparent and visible,” said Wu Huihui.
Regarding enterprises, the “Interim Measures” also stipulate operating conditions, clarifying that those who have not legally obtained investment approval or filing procedures for waste power battery comprehensive utilization projects, completed environmental impact assessments, constructed supporting environmental protection and safety facilities, and obtained discharge permits or completed discharge registration procedures are prohibited from engaging in waste power battery comprehensive utilization activities.
The “Interim Measures” also clarify the definition of waste power battery comprehensive utilization, abandoning the concept of “cascade utilization,” and prohibiting the use of waste power batteries in electric bicycles and other areas prohibited by laws, administrative regulations, and mandatory standards.
In addition, the “Interim Measures” also emphasize the main responsibilities of the major participants in the current power battery recycling market, including but not limited to the sources of various waste power batteries such as battery production, vehicle scrapping, battery swapping operations, and repair and replacement. It clearly states that scrapped new energy vehicles should have power batteries with them, thus cutting off the problem of waste power battery packs flowing freely.
Wu Huihui pointed out that with the effective implementation of the “Interim Measures,” new energy vehicle and power battery manufacturers that have already standardized their recycling networks within the industry chain, as well as the leading enterprises in comprehensive utilization cultivated by the Ministry of Industry and Information Technology (MIIT) through its previous efforts in regulating the comprehensive utilization of waste power batteries, will have a greater advantage in the industry.
Over the past decade, China’s new energy vehicle industry has developed rapidly, with production and sales growing rapidly. In 2015, China’s new energy vehicle industry reached a milestone turning point. That year, China’s new energy vehicle sales surpassed those of the United States for the first time, becoming the world’s largest electric vehicle market. Since then, China has consistently held the top spot in global sales.
The power batteries used in new energy vehicles contain abundant lithium, cobalt, nickel, and other metallic materials, and still have high utilization value after being scrapped. The rapid development and popularization of new energy vehicles have led to increasing attention being paid to the recycling and disposal of waste power batteries.
Against this backdrop, the MIIT, together with relevant departments, issued and implemented the “Interim Measures for the Management of Recycling and Utilization of Power Batteries for New Energy Vehicles” in 2018, initiating a systematic management of waste power battery recycling and utilization, and promoting the initial formation of a recycling system.
Following this, the new energy vehicle and power battery industries continued to accelerate their development, with power battery installations experiencing explosive growth after 2020. The lifespan of electric vehicle power batteries is typically around 6-8 years. As the power batteries used in new energy vehicles gradually enter their retirement period, a wave of power battery retirement is approaching.
According to data from research institutions cited by the official WeChat account of the Ministry of Industry and Information Technology, the amount of waste power batteries generated in China will reach nearly 400,000 tons in 2025 and exceed 1 million tons in 2030.
With relatively certain growth expectations, a large number of players have emerged in the waste power battery recycling sector, leading to some unregulated collection, sale, dismantling, and utilization practices.
The power battery recycling industry has long suffered from a situation where “regular companies are struggling to survive, while small workshops are rampant.”
Zhang Yu, Vice General Manager of GEM Co., Ltd. (002340.SZ), has publicly stated that power battery recycling faces challenges such as difficulty in recycling, difficulty in precise dismantling, difficulty in rapid testing for tiered utilization, difficulty in achieving high resource recovery rates and regeneration, and difficulty in safety management.
During last year’s Two Sessions, Zhang Tianren, Chairman of Tianneng Holding Group, submitted a proposal entitled “Building a Closed-Loop Safety System for the Entire Life Cycle of Power Batteries to Promote High-Quality Development of the Battery Recycling Industry.”
In his proposal, Zhang cited incomplete statistics indicating that approximately 70% of retired batteries are collected by small workshops at higher prices and flow into informal channels. Compared to companies with “whitelist” qualifications, these small workshops do not need to invest heavily in factory buildings, equipment, environmental treatment, and digitalization, thus possessing a cost advantage.
The so-called “whitelist” companies refer to those that meet the “Industry Standard Conditions for Comprehensive Utilization of Waste Power Batteries for New Energy Vehicles” issued by the Ministry of Industry and Information Technology (MIIT). To date, the MIIT has announced five batches totaling 148 compliant companies.
Small workshops simply repair and repackage waste power batteries or roughly crush them before releasing them into the market, severely disrupting the normal order of the power battery recycling market.
If scrapped power batteries are not properly handled and disposed of, the lithium hexafluorophosphate, carbonate organic matter, and heavy metal residues such as nickel and cobalt they contain will cause serious environmental pollution. At the time, Zhang Tianren proposed building an information traceability system covering the entire lifecycle of power batteries, from production, use, comprehensive utilization, to end-of-life recycling, to ensure that batteries ultimately flow into legitimate channels.
The newly released “Management Measures” cover key aspects such as establishing a national traceability information platform for new energy vehicle power batteries and establishing a digital ID management system for new energy vehicle power batteries.
Furthermore, the power battery recycling industry previously experienced a phenomenon of “capacity rush.”
This was mainly because the peak of power battery retirement had not yet arrived, resulting in relatively low battery recycling volumes, while the lithium battery recycling industry’s capacity expansion rate was already rapid.
Capacity was built, but the supply of upstream raw materials was insufficient, leading to high raw material prices. At the same time, downstream product prices were not firm, to some extent even resulting in a situation where “flour was more expensive than bread,” putting pressure on the profitability of the power battery recycling industry.
Wu Huihui pointed out that in 2025, the industry will still be constrained by raw material shortages. The overall profitability of the power battery recycling industry is generally poor.
“Due to excessive expansion in the early stages, the existing wet recycling capacity exceeds 2.8 million tons, and companies are struggling to reach 50% capacity utilization, with no profit inflection point yet,” said Wu Huihui.
She also pointed out that, according to Mysteel’s calculations, a wave of retired power batteries is expected in China in 2028. In addition, the energy storage industry continues its rapid growth, and energy storage batteries will see mass retirements by 2033.
Wu Huihui predicts that the domestic lithium battery recycling industry will continue its rapid growth over the next decade. “The resource recycling industry is a late-cycle industry, and the growth of the battery recycling industry has high certainty.” To date, leading domestic battery companies, including CATL (300750.SZ) and BYD (002594.SZ), have successively entered the battery recycling and utilization business.
As of the end of 2024, CATL had established a global recycling base with an annual processing capacity of 270,000 tons of waste batteries. The company has established more than 240 waste battery recycling points in China and has established cooperative relationships with more than 60 recycling and disposal companies worldwide.
In China, CATL’s battery recycling and reuse business is primarily handled by its subsidiary, BAMP Recycling. As of the end of 2024, the company stated that its nickel, cobalt, and manganese metal recovery rate reached 99.6%, and its lithium metal recovery rate reached 93.8%.
CATL Chairman Zeng Yuqun previously predicted that by 2042, half of the world’s batteries will be produced using recycled lithium.
BYD has also established two battery recycling plants in China, with a battery recycling volume exceeding 10,000 tons in 2024.
BYD disclosed that its domestic battery recycling network mainly relies on industrial parks in various provinces and cities, establishing centralized storage points and interconnecting these points through a logistics and transportation system. Overseas, it mainly entrusts third-party recycling organizations that comply with local regulations to process waste batteries. BYD did not disclose the specific number of its battery recycling points.
Other domestic power battery companies, such as Guoxuan High-Tech (002074.SZ) and EVE Energy (300014.SZ), have also entered the waste battery reuse field. Upstream in the lithium battery industry chain, industry giants including Ganfeng Lithium (002460.SZ), Tianqi Lithium (002466.SZ), and Huayou Cobalt (603799.SH) have already established a presence.
In addition, there are also professional players in the industry, such as GEM (002340.SZ) and Jinsheng New Energy, whose main business is lithium battery recycling.