The current development of Lithium-ion battery recycling is critical for Europe to secure strategic raw materials, but the industry has recently shown a polarized trend. Although geopolitical risks and supply chain disruptions highlight the necessity of localized recycling infrastructure, slower than expected battery production growth and financing difficulties have hindered capacity expansion. Europe has currently established a networked layout of "pre-treatment centers + refining hubs," with pre-treatment capacity projected to reach 420,000 tons/year by 2026. However, hydrometallurgical refining capacity still faces competition from Asia. Proximity based deployment by German automakers is evident, but actual operational capacity may fall short of reported figures due to economic inefficiencies. Europe's recycling technology is dominated by hydrometallurgy, with pyrometallurgy retained only by select companies. The coexistence of decentralized pre-treatment and centralized refining, coupled with regulatory ease in black mass transportation, has accelerated this model's adoption. Although refining capacity is planned to reach 820,000 tons/year by 2030, battery production delays have led to a 40% downward in recycling volumes, potentially causing short-term overcapacity. The industry's future hinges on three key factors which are the pace of end-of-life battery volume growth, the industrialization of innovative technologies like direct recycling.