"Legitimate Enterprises" Launch Counterattack Against Illegal Workshops! "Global Energy Recycling Initiative" Reshuffles the Old Landscape of Battery Recycling

At a time when the world is vigorously promoting the transition to clean energy, batteries, as the core of the new energy industry, are expanding their applications, from electric vehicles (EVs) to energy storage systems (ESS), with batteries present everywhere.

As the ownership of batteries continues to rise, the retirement period of batteries is gradually approaching. How to handle these scrap batteries has become a focal point of concern in the industry.

However, at present, the battery recycling industry is plagued by chaos, with numerous issues in business models, application scenarios, and other aspects that need to be addressed. Accelerating the large-scale and standardized utilization of scrap batteries is urgent.

Professor Stefano Passerini, member of the German Academy of Sciences, James Cruddas, official from the UK Department for Environment, Food and Rural Affairs, Jiang Li, Deputy General Manager and Board Secretary of CATL, and Martin Freer, CEO of the UK's Faraday Institution, among others, discussed the practical paths for the battery circular economy on-site.

At this critical period, the Ellen MacArthur Foundation (EMF), a globally leading advocate for the circular economy, and CATL (300750) held a press conference. During London Climate Action Week on June 24th, the "Global Energy Circularity Initiative" vision was officially launched at the conference - aiming to promote the comprehensive implementation of the battery circular economy and help new battery production completely break away from dependence on primary mineral resources.

The "Global Energy Circularity Initiative" is the first public welfare project for the circular economy promoted by a Chinese enterprise. It is also the first collaborative network covering multiple parties such as the entire industry chain of the new energy industry, governments, and academic institutions, with the goal of building a closed-loop system covering the entire life cycle of batteries to achieve the perpetual circulation of materials. Battery recycling is the foundation for achieving this goal.

Illegal workshops "intercept" while legitimate enterprises "starve"

"High-price purchase of scrap lithium batteries, door-to-door service nationwide", "Want to earn a million a year? Enter the battery recycling business, it's easy", "Nationwide high-price recycling of new energy battery packs"...

Open social media apps on your phone, search for battery recycling, and you can see a large number of related terms and videos about battery recycling businesses. Most of the content is from small manufacturers, intermediaries, training institutions, and even many small workshops with incomplete qualifications engaged in battery recycling businesses, posing serious safety hazards.

The latest data from Qichacha shows that as of now, there are 182,700 existing enterprises related to battery recycling in China. In terms of registration volume, the overall trend of related enterprise registrations has been on the rise over the past decade. From 2022 to 2024, the annual registration volume exceeded 40,000 each year. However, among the more than 100,000 battery recycling-related enterprises nationwide, only 156 have obtained the white list qualification from the Ministry of Industry and Information Technology (MIIT).

According to a research report by the Development Research Center of the State Council, the standardized recycling rate of power batteries for new energy vehicles (NEVs) in China is less than 25%, with most spent batteries flowing to non-compliant enterprises operating in the "gray zone."

It is reported that the current battery recycling market mainly consists of two business models. The first is a manufacturer-oriented approach, where battery manufacturers, vehicle manufacturers, including vehicle dismantling plants, send obsolete batteries to relevant third-party recycling companies for processing, or through responsibility allocation, send them back to producers for recycling and reuse. The second model targets consumers, involving small workshops (to C), which are numerous, widely distributed, and characterized by disordered technology.

Industry insiders have stated that some black workshops purchase batteries from private car owners without issuing tax invoices, using high prices to "intercept" and compete for battery supplies at prices 10% to 30% higher than those of legitimate enterprises, leading to a situation where legitimate enterprises often "cannot get enough" batteries, which has become the norm in the industry. Taking ternary aluminum shell lithium batteries as an example, black workshops offer 22,000 yuan/mt, while legitimate enterprises can only offer 19,000 yuan/mt. The price disadvantage makes it difficult for law-abiding enterprises to survive.

Additionally, due to the lack of battery traceability systems in power batteries produced by many manufacturers in earlier years, it is impossible to trace the entire lifecycle application of batteries, which has also led to the continued emergence of black workshops that are difficult to regulate.

It is understood that black workshops currently commonly use violent dismantling methods such as hammering and cutting without any explosion-proof measures. On the other hand, the environmental pollution caused by black workshops has reached the level of criminal offenses. Multiple judicial cases have shown that the direct discharge of acid leaching solutions from black workshops has caused severe groundwater pollution, and the random stacking of fluorinated separators has resulted in soil that is difficult to restore for hundreds of years.

Professor Xu Shengming from the Institute of Nuclear and New Energy Technology at Tsinghua University stated in an interview: "Theoretically, (spent) lithium batteries are hazardous waste because they contain 35 compounds, seven of which are hazardous chemicals and classified as hazardous waste. Where is the real pollution from lithium-ion batteries? It occurs during dismantling when the electrolyte, lithium hexafluorophosphate (LiPF6), decomposes into hydrogen fluoride and enters the air after exposure to water vapor."

Furthermore, due to the lack of professional dismantling and recycling equipment, extracting metals through crude methods such as burning, cutting, and acid leaching results in a recovery rate of valuable metals like lithium, copper, and cobalt of less than 50%, far below the level of over 90% achieved by legitimate enterprises.

If black workshops are not promptly curbed, not only will legitimate enterprises struggle to survive, but they will also fail to achieve effective resource recycling. Instead, they will face systemic risks such as frequent safety accidents and increased environmental pollution.

The standardized development of the industry requires joint efforts from the government and the industry.

Multiple industry experts have mentioned that the problems faced by the recycling and utilization of power batteries require collaborative efforts from multiple aspects. Measures such as policy guidance, technological innovation, the establishment of a comprehensive recycling system, strengthening corporate responsibility, and public education should be implemented to gradually promote the healthy development of China's power battery recycling industry.

In December 2024, the Ministry of Industry and Information Technology (MIIT) revised and issued the "Comprehensive Utilization Industry Specification Conditions for Scrap Power Batteries from New Energy Vehicles (2024 Edition)", which requires enterprises to increase the lithium recovery rate from 85% to 90% during the smelting process, ensure an electrode powder recovery rate of no less than 98%, and keep the aluminum impurity content below 1.5%, among other requirements. It guides enterprises to strengthen technological innovation and improve their technological capabilities. Meanwhile, it proposes that enterprises should establish a quality assurance mechanism with traceable products and accountable responsibilities, and increase mandatory standard requirements for disassembly recycling products to further enhance the quality of comprehensively utilized products.

At the first meeting of the National Working Group on the Recycling and Utilization of Power Batteries from New Energy Vehicles held by the MIIT at the end of May this year, it was also emphasized that it is necessary to improve the regulatory and standard system, and regulate recycling and utilization behaviors through legal means; strengthen supervision and management across the entire industry chain, closely monitor battery production, vehicle scrapping, dismantling and utilization, and other links, address bottlenecks and obstacles in the supervision of the entire process, use digital technology to strengthen the monitoring of power battery flows, and investigate and punish illegal dismantling that pollutes the environment, unlicensed operations, and other behaviors in accordance with the law.

The meeting also pointed out that it is necessary to strengthen industry capacity building, increase collaborative research, development, and promotion and application of key technologies, processes, and equipment, further strengthen industry standard management, implement dynamic management of enterprises that meet the specification conditions with a "flexible entry and exit" approach, support key enterprises to excel and grow stronger, and guide the healthy development of the industry.

Wang Du, Vice President of the China Automobile Dealers Association, had previously stated, "We suggest that an extended producer responsibility system should be implemented throughout the entire life cycle of power batteries. The producer should be responsible for the entire life cycle. If enterprises all take on their main responsibilities and the government effectively guides and directs them, then the scrapping and dismantling of power batteries will be on the right track. This is also a crucial prerequisite for the healthy development of new energy vehicles."

Facing the industry's long-standing issues and the impending wave of battery retirements, the "Global Energy Recycling Initiative" can be regarded as a practical blueprint for reshaping the value chain through systemic changes. By establishing a transparent system covering the entire chain of design, production, use, and recycling, it ensures that battery products can be safely and responsibly recycled and disposed of, minimizing environmental and safety hazards throughout the entire value chain.

On June 24, during "London Climate Action Week", Jiang Li, Deputy General Manager and Board Secretary of CATL, announced that within the next 20 years, 50% of new battery production globally will be free from mineral mining, using the battery industry chain as a starting point to drive a systemic transformation of the energy system towards efficiency, low carbon, and sustainability.

As a global leader in the battery industry, CATL deeply recognizes that a single enterprise cannot drive systemic changes and that it must unite the entire industry chain to take collective action. To this end, CATL has established in-depth cooperation with the Ellen MacArthur Foundation to integrate global perspectives and professional insights, and to accelerate the realization of a circular economy for batteries by building cross-border trust mechanisms, promoting the sharing of technological knowledge, and redefining circular value.

Four Action Guidelines Released to Accelerate the Implementation of a Circular Economy for Batteries

To achieve the aforementioned vision, the four action guidelines of the "Global Energy Circulation Plan" were simultaneously released, providing a clear direction for the comprehensive transformation of the battery industry towards a circular economy and driving systemic changes in the industry.

1. Reshaping the Value Chain SystemEmpowering low-carbon development across the entire value chain by focusing on the upstream and downstream of the battery industry chain. Currently, CATL has launched the "CATL Carbon Chain" management system, which integrates the concept of a "circular economy" into every link, promoting systematic carbon reduction across the entire value chain and achieving efficient resource allocation and circular flow.

2. Product RedesignIncorporating circular concepts from the source of battery design, and developing more durable, easily disassembled, recyclable, and second-life applicable battery products through modular design and the "easy disassembly first" design principle. CATL is continuously improving the life cycle of batteries, with the current cycle life of ESS batteries reaching 18,000 cycles, effectively reducing material demand and carbon emissions.

3. Reconstructing the Business ModelRedefining the commercial realization model of batteries, shifting from traditional product sales to a new model centered around shared services. CATL is currently deploying a service network of over 10,000 battery swapping stations. In the future, through new models such as battery swapping, battery banks, and shared fleets, it will not only significantly reduce user costs but also maximize the utilization rate of each battery.

4. Improving the Recycling Closed LoopContinuously enhancing recycling efficiency and the proportion of same-level recycling by building an efficient and large-scale recycling system, enabling true "recycling and reuse" of battery materials. This will reduce dependence on mineral mining from the source and create a sustainable supply chain.

"We aim to make energy circulation an economy," said Jiang Li, noting that the circular economy will unlock new economic opportunities and social value. By driving changes in the full life cycle of batteries, from design, manufacturing, use, to recycling and reuse, the circular economy for batteries will open up vast market spaces. It is projected that by 2040, the global battery recycling market size will exceed 1.2 trillion yuan, and the battery value chain will create over 10 million jobs.

Currently, as the global new energy wave continues to advance, some countries and regions have successively introduced "green trade barriers," with the access thresholds for the new energy industry in places such as the US and Europe continuously rising.

According to the latest EU Battery Regulation, most batteries exported to Europe must be accompanied by carbon footprint declarations and labels. Battery export producers are required to disclose carbon emission data from upstream mining and materials to battery production, recycling, and reuse. Additionally, the new regulation mandates that battery manufacturers assume responsibility for the entire life cycle of batteries beyond the production stage, including recycling and disposal of spent batteries.

The EU Battery and Waste Battery Regulation also imposes stringent requirements on the recycling rates of spent batteries: starting from December 31, 2027, the recycling rates for cobalt, copper, lead, and nickel must reach 90%, while that for lithium must reach 50%...

The introduction of a series of regulations implies that battery producers aiming to secure a global market presence must actively participate in building recycling systems, promoting the second-life application and recycling of batteries, and taking responsibility for the entire life cycle of their products to achieve stricter carbon footprint standards.

"CATL's targeted recycling solution represents the future direction of the industry," said Martin Freer, CEO of the UK's Faraday Institution, at the conference, expressing anticipation for future collaboration in promoting the implementation of a battery circular economy.

Data shows that Brunp Recycling, a subsidiary of CATL, operates one of the world's largest and most advanced battery recycling networks. The company has seven production sites and nine zero-carbon processing plants reasonably distributed across China, with an annual capacity to process over 270,000 mt of spent batteries.

In 2024, Brunp Recycling recycled 130,000 mt of spent batteries, including 17,000 mt of lithium chemicals. Meanwhile, Brunp Recycling has achieved a nickel, cobalt, and manganese recycling rate of 99.6% and a lithium recycling rate exceeding 93.8%, far surpassing EU standards. Compared to traditional mining, carbon emissions are reduced by approximately 30%. This robust infrastructure demonstrates the scalability of industries required for a battery circular economy and provides a model for development in other regions. As recycling scales up, it will generate a series of economic benefits, including driving the development of upstream and downstream industries in the industry chain, reducing battery production costs, decreasing reliance on imported minerals, and creating job opportunities, among others.

Furthermore, the "Global Energy Recycling Initiative" will promote the application of a series of innovative business models, such as battery banks, Battery as a Service (BaaS), battery swapping, Vehicle-to-Grid (V2G), shared fleets, battery second-life application (e.g., for energy storage), and second-life applications. These emerging business models will bring new growth points and profit sources to various segments of the industry chain, driving a fundamental transformation from a linear economy to a circular economy.

Currently, CATL's chocolate battery swapping solution supports 20 passenger car models, and more automakers and car models will adopt the chocolate standard in the future. The Qiji battery swapping solution for commercial vehicles has been launched in collaboration with over a dozen automakers, introducing over 30 chassis-based battery swapping car models. The company plans to deploy and operate over 1,000 battery swapping stations in 30 Chinese cities by 2025, with a medium-term goal of 10,000 stations.

Today, as the global climate crisis becomes increasingly severe, CATL's zero-carbon practices hold exemplary significance beyond the industry. Jiang Li pointed out that in the next step, CATL will support the foundation in conducting systematic research on the battery circular economy, exploring transformation paths for the battery circular economy in different countries and regions, and providing replicable and scalable circular solutions for the global energy transition.

Under the circular economy model, through second-life application, efficient recycling, and material regeneration, the full life cycle value of a single battery is expected to increase by 30-50%, creating new and substantial profit growth points for the entire industry chain.

Conclusion:

According to EVTank data, the actual recycling volume of spent lithium-ion batteries in China reached 654,000 mt in 2024, up 5.0% YoY. Among them, the recycling volume of LFP batteries and scrap reached 400,000 mt, with the proportion continuing to rise to 61.2%, while the recycling volume of ternary lithium batteries and scrap was 243,000 mt. EVTank predicts that by 2030, the recycling volume of lithium-ion batteries in China will reach 4.246 million mt.

In the context of imperfect policy standards and uncertain technological routes, the disorderly state of the battery recycling market is also an inevitable development stage in the early stages of the industry. With the gradual improvement of relevant policies and the realization of the vision of the "Global Energy Recycling Plan," the future battery recycling business is bound to flow towards formalized operations, jointly building a new global energy system that is efficient, recyclable, and resilient.