Malaysia is rapidly positioning itself as Southeast Asia’s next hub for electric vehicle (EV) battery recycling, as government policy, private investment, and global demand for sustainable battery materials converge. From early pilots in 2022 to large-scale projects and new regulatory frameworks in 2025, the country’s black mass industry bringing the intermediate product recovered from used lithium-ion batteries is moving rapidly from concept to scale.
Policy Foundations and Early Pilots:
Malaysia laid the groundwork nearly two decades ago with the Environmental Quality Regulations of 2005, which classified used lithium-ion batteries as “scheduled waste” (SW103). This framework allowed only licensed facilities to collect, transport, and treat batteries under strict oversight, initially targeting lead-acid and consumer batteries but later extending to EVs. As adoption of EVs accelerated, regulators began updating enforcement to address the far more complex recycling requirements of lithium-ion systems.
The first domestic pilot came in 2022 through a collaboration between Ni Hsin EV Tech and SIRIM Berhad, but the project collapsed before scaling. A stronger breakthrough followed in May 2024, when private firm EcoNiLi launched a RM50 million facility in Perak. Capable of processing thousands of tonnes annually, the plant aims to refine black mass into nickel, cobalt, and lithium salts. These early steps highlight Malaysia’s intent, but the challenge ahead lies in scaling capacity and meeting international quality standards.
Strengthening Policy and Industry Capacity:
Malaysia is reinforcing its policy ecosystem to attract recyclers. The Malaysian Investment Development Authority (MIDA) and Malaysian Green Technology and Climate Change Corporation (MGTC) have rolled out green tax incentives (GITA/GITE), while the government is preparing to introduce Extended Producer Responsibility (EPR) for EV batteries, requiring producers to take charge of end-of-life collection and recycling. These measures lower investment barriers and create policy-driven demand for recycling capacity.
At the same time, recyclers are adopting hydrometallurgical technologies to produce battery-grade salts, a critical step for reintegration into the EV supply chain. Yet challenges remain on the rise of lithium iron phosphate (LFP) batteries reduces nickel and cobalt recovery economics, and China’s dominance in black mass recycling creates stiff competition. For Malaysia to succeed, it must leverage regional logistics advantages, strengthen ESG standards, and build international partnerships, though current export volumes remain limited.
Regional Outlook and Growth Prospects:
SMM believes Malaysia can leverage its manufacturing base and proximity to Southeast Asia’s EV markets to position itself as a regional recycling hub. Cross-border flows of spent batteries and scrap from Indonesia, Thailand, and Vietnam could strengthen this role, provided transboundary movements are aligned with the Basel Convention. Establishing battery passports and traceability systems, which has already been discussed in the EU and China, and it would differentiate Malaysia on ESG compliance and attract global OEMs seeking transparent supply chains.
With at least two additional plants in planning, Malaysia’s recycling capacity could exceed 20,000 tonnes annually, while spent EV batteries are projected to surpass 50,000 tonnes within five years. SMM assesses that the industry is entering a decisive growth phase, in the short term (2025–2027), expansion will be driven by rapid capacity build-out and regulatory alignment, in the medium term (2027–2030), competitiveness will depend on adapting to evolving battery chemistries, advancing technology, and maintaining ESG leadership. If executed effectively, Malaysia could emerge as Southeast Asia’s strategic alternative to China in the regional battery recycling supply chain.
