[SMM Analysis] In-Depth Interpretation of 2025 Lithium Battery Recycling Policies: Industry Transformation and Opportunities under Full-Chain Regulation

With the rapid development of China's new energy vehicle (NEV) industry, power batteries have entered a phase of large-scale retirement. By the end of 2024, national NEV ownership reached 31.4 million units. According to SMM predictions, the upper limit of retired power battery volume in 2025 is expected to reach 357 GWh, and it will exceed 1,100 GWh by 2030. Against this backdrop, from 2024 to 2025, the state intensively introduced specialized policies in the lithium battery recycling sector, establishing a closed-loop management framework centered on the extended producer responsibility system. This framework encompasses full-chain standardization, clarification of responsible entities, elevation of technical thresholds, and digital traceability supervision, anchoring a clear direction for the industry's high-quality development.

The current lithium battery recycling policy system has formed a three-tier architecture of "top-level design + industry norms + standard support." The "Action Plan for Improving the NEV Power Battery Recycling and Utilization System," reviewed and passed at the State Council executive meeting in February 2025, serves as the top-level design document. It explicitly proposes using legal means to strengthen full-chain management, overcome recycling bottlenecks, and achieve traceability throughout the entire process of battery production, sales, dismantling, and utilization. The "Industry Standard Conditions for the Comprehensive Utilization of Waste Power Batteries from New Energy Vehicles (2024 Edition)," previously issued by the MIIT, raises standards from a technical perspective. It increases the lithium recovery rate requirement from ≥85% to ≥90% and adds mandatory indicators such as an electrode powder recovery rate of ≥98%, driving technological upgrades among enterprises. Meanwhile, the five national standards issued within the year by the State Administration for Market Regulation further improved the standard system covering aspects from dismantling safety to evaluation of recycled materials. The number of relevant national standards has now reached 22.

The core logic of policy implementation lies in clarifying responsibilities and addressing industry pain points. Regarding responsible entities, the policies clearly designate automakers and battery manufacturers as primary responsible parties. They are required to achieve full coverage of recycling networks in their sales regions through self-construction, co-construction, or entrusting third parties, and promote convenient services like "online appointment + offline recycling." This requirement directly addresses previous industry pain points of being "small, scattered, and chaotic" with rampant informal channels—statistics show that by the end of 2023, there was still room for improvement in the standardized recycling rate of power batteries in China. A significant volume of retired batteries was handled by small workshops, leading to resource waste and potential safety hazards. To strengthen supervision, the policies mandate the implementation of a unique battery coding system, enabling full life-cycle monitoring through the MIIT's traceability platform. Particular emphasis is placed on strengthening control over second-life applications, explicitly prohibiting the use of second-life batteries in the e-bike sector and requiring safety assessments for batteries over five years old.

Policy guidance is driving profound changes in the industry. On one hand, industry reshuffle is accelerating, as the raised technical thresholds will force small workshops to exit the market, highlighting the advantages of top-tier enterprises. Brunp Recycling (a CATL subsidiary), GEM, CNGR and other enterprises have taken the lead in completing their layout in the lithium battery recycling sector. Among them, GEM has established a global recycling network; CATL, leveraging the technology and capacity support from Brunp Recycling, has achieved a waste battery processing capacity of 270,000 mt and is advancing capacity expansion; CNGR, with its Tongren base in Guizhou as the core, has built a full-process production system covering "battery disassembly – second-life application/crushing and decomposition – comprehensive recycling and regeneration". On the other hand, business models continue to optimize. The extended producer responsibility system drives deep integration between automakers and battery manufacturers, and the integrated "sales – after-sales – recycling" system has become the mainstream direction in the industry. Companies such as Gotion High-tech are actively promoting the construction of recycling service networks and exploring paths for global layout. Meanwhile, carbon compliance requirements have spurred a wave of technological innovation. Green technology routes such as short-process hydrometallurgical extraction and zero-carbon recycling are accelerating their industrial application. Brunp Recycling is advancing the construction of zero-carbon recycling plants, with related processes capable of achieving significant carbon emission reduction benefits.

Looking ahead, enterprises need to accurately grasp policy directions for their development layout. In the short term, priority should be given to fulfilling compliance requirements, upgrading production processes in line with industry standards, and proactively connecting to official traceability platforms. In the medium term, efforts should focus on strengthening the recycling network, deepening collaboration with automakers and dealers to ensure stable supply of battery recycling volume. In the long term, the focus should be on technological innovation, increasing R&D investment in areas such as intelligent disassembly and low-carbon regeneration, while expanding second-life application scenarios like ESS power stations and base station backup power supplies to enhance product added value. For the industry, as policies continue to be implemented and the "retirement wave" gradually arrives, the recycling market size is expected to achieve a massive breakthrough by 2030, becoming an important force supporting the sustainable development of the new energy industry and national resource security.

SMM New Energy Research Team

Wang Cong 021-51666838

Ma Rui 021-51595780

Feng Disheng 021-51666714

Lü Yanlin 021-20707875

Lei Yue 021-20707873