Significant Potential in the Battery Recycling Market

The rapid growth of the electric vehicle (EV) industry in China is revolutionizing the automotive landscape, with a particularly strong focus on the sustainable management of energy storage systems. As of mid-2023, the number of electric vehicles in China soared to an impressive 24.72 million, constituting 7.18% of the total car ownership. Among these, pure electric vehicles hold a significant share, accounting for 73.35% of the total new energy vehicles. This burgeoning market is not just changing the face of transportation but is also triggering a pressing need for effective recycling solutions, particularly for lithium-ion batteries that power these vehicles.

By 2030, the total amount of decommissioned power and energy storage batteries in China is predicted to exceed 3 million tons. This estimate translates into a staggering recovery market on the horizon, potentially reaching beyond 140 billion yuan, indicating an explosive growth in comparison to the modest figures recorded in 2022. The recovery and reuse of these batteries are not merely environmental necessities but also represent a substantial economic opportunity within the rapidly expanding recycling sector.

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Energy storage batteries typically retain their efficacy until their capacity declines to about 80% of the original specifications. At this juncture, they can be harvested for recovery through two primary methods: cascading utilization and regeneration. Cascading utilization involves sorting, disassembling, and reconstituting these retired batteries for use in other sectors, effectively extending their life cycle. Regeneration, on the other hand, focuses on extracting valuable materials such as lithium, cobalt, and nickel for reuse in the production of new batteries. However, the improper handling of discarded batteries can lead to significant safety hazards and environmental pollution, including risks of electric shock and fire due to hazardous chemicals.

The importance of advancing the recycling of new energy power batteries aligns closely with China’s broader goals of reducing carbon emissions and promoting sustainable development. Recent analyses suggest that recovering just one kilogram of material can result in a carbon emission reduction of about 7% to 10%. Furthermore, as China's dependency on imported key resources like nickel and cobalt remains high, developing a robust battery recycling sector is crucial to mitigate resource shortages and bolster the circular economy within the new energy industry.

Currently, the capacity for recycling and utilizing new energy power batteries in China is accelerating rapidly. By 2023, the total volume of comprehensive utilization reached approximately 82,500 tons. According to Li Li, director of the specialized committee for new energy battery recovery, 148 normative enterprises have been identified across five batches, and over 10,000 recovery service points have been established in 327 municipal districts nationwide. This network aims to ensure comprehensive collection and paves the way toward a more diversified recovery ecosystem.

Nevertheless, challenges remain in the battery recovery industry, particularly concerning the development of sustainable business models, regulatory oversight, and technological advancement. The inconsistency in battery recovery routes leads to difficulties in ensuring uniform quality in processing, which complicates the cascading utilization process. Despite the Ministry of Industry and Information Technology having released several lists of compliant enterprises, non-standardized operations still persist, contributing to safety risks and wasted resources.

In August 2023, directives were issued mandating that EV and battery manufacturers should incorporate environmental recovery requirements into their product development phases. The goal here is to enhance battery standardization to maximize the lifecycle value of batteries. Experts argue for more granular national standards that specify corporate strategies regarding project siting, comprehensive utilization capabilities, product quality, and environmental safeguards, all of which can significantly improve the management of waste energy storage batteries.

The vice president of the China Circular Economy Association has called for innovative business models, greater cooperation along the supply chain, and a rational allocation of resources to minimize redundancy in recovery points, ultimately lowering recycling costs. Strengthening regulatory oversight of battery flow is also critical, establishing stringent admission criteria for recycling enterprises to ensure safety and environmental compliance during subsequent steps of utilization.

Further recommendations for the regulatory landscape call for the establishment of robust standards for recovery service points and systems. According to Wei Honglian, deputy director of the Solid Waste and Chemical Management Technology Center, effective regulation must reach the "last mile," ensuring that treatment technologies and pollution control measures are clear and enforceable.

On the technical side, Wang Jianxin, vice president and executive secretary-general of the China Battery Industry Association, has emphasized the need for companies along the battery supply chain to enhance their core patent strategies and advance recycling technologies. Accelerating the development of resource extraction and refining technologies will bolster competition throughout the supply chain, fostering synergistic development between upstream and downstream sectors and enhancing overall resource reliability.

The next phase of China's battery recovery efforts should focus on enhancing the regulatory framework, transitioning from administrative rules to formal laws that reinforce compliance and oversight. Addressing existing weaknesses requires a rigorous approach to standardization in key areas like green design for end-of-life batteries, residual valuation, product quality, and carbon accounting. Furthermore, dynamic management of compliant enterprises and encouragement of regional collaborations to foster a closed-loop recovery paradigm—integrating recovery, cascading use, and regeneration—are essential.

Meanwhile, government entities should stimulate enthusiasm in research institutions and businesses through tactical support mechanisms such as dedicated funds and subsidies, promoting collaborative innovation to overcome common technological hurdles within the industry. Doing so will be vital in transitioning China toward a sustainable and efficient model for recovering and recycling power batteries, ensuring that their lifecycle contributes positively to environmental goals while simultaneously addressing the challenges posed by material scarcity.