Lithium Battery Recycling Expected to Reach 470,000 mt of Scrap by 2025: How Can Industry Standards Be Rectified?

According to the latest data from the Ministry of Public Security, by the end of 2024, the ownership of NEVs in China reached 31.4 million units, accounting for 8.90% of the total number of automobiles. Among them, the ownership of pure EVs was 22.09 million units, representing 70.34% of the NEV ownership. In 2024, 11.25 million NEVs were newly registered, accounting for 41.83% of all newly registered automobiles, an increase of 3.82 million units compared to 2023, up 51.49%. From 1.2 million units in 2019 to 11.25 million units in 2024, the growth has been rapid.

According to the forecast by the China Industrial Innovation Alliance of Power Batteries, by 2030, China's power battery installations will exceed 1,300 GW. In the future, China is expected to face a large-scale retirement of power batteries, presenting significant potential in the power battery recycling market. Over the past decade, the number of registered enterprises related to battery recycling in China has increased annually. Particularly in 2021, the annual registration volume surged 300.0% YoY to 27,400, marking the peak growth rate in the past decade. In 2023, the registration volume reached 46,200, setting a new high for the past decade. Data from Qichacha shows that as of December 19, 2024, China had registered 40,200 related enterprises.

The recycling rate of lead-acid batteries has already exceeded 98%, but over the past decade, the recycling of lithium batteries, including those used in 3C products, NEVs, and the ESS sector, has been described as "chaotic." With the implementation of whitelist access and industry regulatory standards, what is the current situation? The recycling market has vast potential, but how can the industry "rectify the chaos" and move towards healthy development? Below is a joint analysis and assessment by analysts from Battery Network (WeChat ID: mybattery) and DeepSeek.

Analysis of the Current Status of the Lithium Battery Recycling Industry

Industry Chaos and Regulatory Challenges

The current lithium battery recycling industry still exhibits a "small, fragmented, and disordered" structure, with a large number of waste batteries flowing into informal workshops. These workshops, due to outdated technology and non-compliance with environmental standards, lead to significant resource wastage and secondary pollution. Although the government has introduced multiple policies (such as the "Specifications for the Comprehensive Utilisation of Waste NEV Power Batteries (2024 Edition)"), the industry's entry barriers remain low. Recycling entities are dispersed among battery producers, automakers, third-party recycling companies, and intermediaries, making regulation challenging.

Promotion of Industry Standards and Whitelist Mechanisms

In recent years, the government has strengthened regulations through policies such as the "extended producer responsibility system" and the "14th Five-Year Plan for Circular Economy Development," requiring automakers and battery companies to take primary responsibility for recycling and establishing a whitelist system to enhance industry concentration. For instance, the "Guidelines for the Construction of Lithium-Ion Battery Recycling Systems for E-Bikes," newly released in 2025, explicitly requires companies to build or co-build recycling networks and strengthen safety supervision across the entire chain. However, in practice, the proportion of formal recycling remains insufficient, and some companies have yet to fully implement their responsibilities.

Market Potential and Technological Bottlenecks

With the surge in NEV sales (in 2024, China's NEV production and sales reached 12.888 million and 12.866 million units, respectively, up 34.4% and 35.5% YoY), the retirement wave of power batteries is accelerating. In 2024, China's cumulative power battery installations reached 548.4 GWh, up 41.5% YoY. The theoretical scrap volume of power batteries is expected to reach 470,000 mt in 2025, with the recycling market size exceeding 32.5 billion yuan. However, recycling technology, primarily based on wet processes, faces challenges such as high energy consumption and pollution risks. Although cascade utilization is being promoted, issues like performance stability and safety risks persist.

Key Pathways to Promote Healthy Industry Development

Strengthening Policy Implementation and Regulatory Oversight

Improving Traceability Mechanisms: Use digital platforms to track the entire life cycle of batteries, ensuring waste batteries flow into formal channels.

Strict Law Enforcement: Increase penalties for illegal recycling, promote whitelist enterprises to dominate the market, and enhance the proportion of formal recycling.

Technological Innovation and Standardization

Green Recycling Technologies: Promote technologies such as the electrochemical recycling method developed by the University of Science and Technology of China, which integrates pollutant treatment with resource recovery to reduce energy consumption and carbon emissions.

Unified Technical Standards: Develop performance evaluation and safety detection standards for cascade utilization batteries to mitigate market risks.

Industry Chain Collaboration and Model Innovation

Corporate Responsibility: Automakers and battery producers should establish recycling networks or collaborate with third parties to form a "production-recycling-reuse" closed loop.

Integrated Model: Integrate recycling, transportation, and processing stages to reduce intermediaries and improve efficiency (e.g., the demonstration role of state-owned enterprises like China Resources Recycling Group).

Public Participation and Market Education

Consumer Guidance: Strengthen public environmental awareness through campaigns and establish convenient recycling channels (e.g., online appointments, community collection points).

Economic Incentives: Provide tax benefits or subsidies to compliant recycling enterprises to enhance their market competitiveness.

Summary and Future Outlook

On February 21, the State Council Executive Meeting reviewed and approved the "Action Plan for Improving the NEV Power Battery Recycling System." The meeting emphasized that China's NEV power batteries have entered a stage of large-scale retirement, making it crucial to comprehensively enhance recycling capabilities. Efforts should focus on full-chain management, addressing bottlenecks, and building a standardized, safe, and efficient recycling system. Digital technologies should be used to monitor the entire life cycle of power batteries, ensuring traceability from production to sales, dismantling, and reuse. Legal measures should be employed to regulate recycling, relevant administrative regulations should be formulated and improved, and supervision should be strengthened. Standards for green design and carbon footprint accounting of power batteries should be developed and revised to guide recycling efforts.

Driven by resource scarcity and environmental demands, the lithium battery recycling industry is poised to achieve both economic and environmental benefits. With more detailed policies, technological breakthroughs, and industry chain integration, the lithium battery recycling industry is expected to transition from disordered competition to scaled and specialized development after 2025, becoming a key pillar of the global circular economy.