Over 1 Million Tons of Retired Batteries “Approach,” Is the Turning Point for Lithium Battery Recycling Coming?

Retired batteries are "encircling the city," with an annual retirement volume of over one million tons looming on the horizon.

The data shows that from 2018 to 2020, China's new energy vehicle market added approximately 4 million units.Power batteryBased on a general lifespan of 5 to 8 years, this batch of batteries is expected to be retired between 2025 and 2027.

It is predicted that the retirement volume of power batteries will exceed one million tons by 2025, and by 2030-2032, the annual retirement volume will reach 3.5 million tons, corresponding to a market scale of over one hundred billion yuan.

The recycling networks that leading companies have been developing for many years are accelerating from the investment phase to the effectiveness phase.

Tesla's global Vice President Tao Lin recently revealed that in 2024, the recycled battery materials are enough to produce batteries for 21,000 Model Y vehicles, with 90% of the waste directly returning to production.

BYD has also recently disclosed that through its self-established production-recycling-regeneration closed loop, it has recycled over 10,000 tons of power batteries by the end of 2024.

Battery manufacturers and professional recycling companies are both making efforts. Not long ago, CATL launched the “Global Energy Recycling Program.” Jiang Li, the company’s vice president, revealed that CATL has built the world’s largest…Battery RecyclingIn 2024, approximately 130,000 tons of used batteries will be recycled, producing 17,000 tons of lithium salts, and the scale effect is beginning to show.

In 2024, GEM recorded a historic high with 33.2 billion yuan in revenue. The company recycled and dismantled 36,000 tons of power batteries, a year-on-year increase of 31%. The recovery rate of extracting lithium carbonate from black powder exceeded 90%, and lithium production surpassed 4,000 tons, with simultaneous improvements in technology and efficiency.

For a long time, small workshops have occupied half of the market by relying on different cost control methods, leading to an industry dilemma where "bad money drives out good."

Data shows that there are nearly 190,000 domestic battery recycling-related enterprises, while only 156 enterprises have been recognized by the Ministry of Industry and Information Technology as meeting the "Industry Standards for Comprehensive Utilization of Waste Power Batteries from New Energy Vehicles" whitelist.

Nowadays, as major players such as Tesla, CATL, and GEM continue to unleash their large-scale capabilities and make breakthroughs in both recycling volume and technical metrics, the balance in this contest is quietly shifting.

Is the turning point in the lithium battery recycling landscape about to arrive?

Scaling Breakthrough

Can the industry's discourse power be reshaped?

The current lithium battery recycling system is still in its early stages, but the large-scale capabilities of leading companies have begun to reshape the industry landscape.

In the early days, the industry was dominated by small workshops and decentralized operations, with simple systems functioning at each stage. Now, however, large-scale enterprises with stronger comprehensive capabilities are focusing on long-term positioning and are leveraging their technological and capital advantages to carve out a niche in the market.

At the economic level, leading enterprises have achieved cost parity with the "streamlined process" small workshops.

Zhang Yang, Director of the Power Battery Recycling Technology Research and Development Center and the New Energy and Rare Precious Materials Engineering Technology Laboratory at the Hefei Institute of Advanced Technology Innovation, Chinese Academy of SciencesDuring an interview with Gao Gong Lithium Battery, it was stated:“At the current price level, taking into account the increase in black mass imports and the volume of retired batteries, the economic costs for large enterprises with technological and capital advantages and for small workshops can be balanced.”

Moreover, leading enterprises not only pursue production returns but also strive to create benchmark models such as “dark factories,” establishing standards in areas like pollution source control, emission management, and handling non-economic value elements—precisely the aspects that small workshops are incapable of managing, and which constitute the core differences between large-scale enterprises and small workshops.

On the technical sideLeading companies have achieved efficient processing through the integration of multiple techniques: a combination of physical pretreatment, hydrometallurgical refining, and pyrometallurgical auxiliary processing, significantly improving the efficiency of black powder treatment.

Zhang Yang believes that the recycling industry does not have a single technology that can solve all problems; it is essentially a combination of multiple methods. Leading companies achieve cost reductions per unit of processing through this technological synergy and gradually offset the cost-control advantages of small workshops.

In terms of regional layoutLeading enterprises, on the other hand, optimize resource allocation by leveraging the framework of a unified national market. For example, after state-owned capital systems such as China National Environmental Protection Group entered the market, they integrated local resource recycling groups and established preprocessing centers in regions with concentrated production and sales of new energy vehicles, thereby reducing intermediate links and market friction costs. This large-scale network has rendered the fragmented recycling model of small workshops increasingly obsolete.

The key point isIndustrial chain collaboration capabilityCurrently, the "production-recycling" closed loop between battery manufacturers and automakers has proven effective: BYD's recycled materials are directly used in the production of blade batteries, and Tesla's regenerated materials enter the Model Y supply chain. This internal digestion model bypasses intermediaries and effectively enhances the responsiveness of the recycled materials market.

The survival space for small workshops continues to shrink.

Eliminate or integrate into the new ecosystem?

The cost advantage of small workshops is facing dual pressure. Industry insiders reveal that these workshops cut costs by reducing environmental protection equipment and lowering investment in taxes and safety, allowing them to offer purchase prices 15%-20% higher than formal enterprises. However, as lithium carbonate prices return to rational levels, their profit margins have been significantly squeezed, resulting in a weakened incentive for recycling.

Meanwhile, strengthened regulations have further reduced regulatory blind spots. The 2024 revised "Administrative Measures for the Recycling and Utilization of New Energy Vehicle Power Batteries" clearly requires recycling enterprises to possess environmental assessment qualifications and digital traceability capabilities. From a legal perspective, regulatory enforcement will be intensified in stages, which continuously widens the gap between small workshops and formal enterprises.

More importantly, the flexibility advantage of small workshops is also weakening. The previously decentralized model that relied on manual dismantling can no longer meet the standardized processing requirements for retired batteries; especially with the rise of lithium iron phosphate...Lithium batteryThe increase in proportion requires specialized equipment to overcome structural challenges for recycling, whereas the simple processing methods used by small workshops result in significantly lower lithium recovery rates.

In contrast, leading enterprises can generally increase the recovery rate to over 95% through advanced processes, and this technological gap is gradually causing small workshops to lose their market competitiveness.

Taking GEM Co., Ltd. as an example, its Deputy General Manager Zhang Wei mentioned in a media interview that in 2024, GEM has already achieved a nickel recovery rate of over 99% and a lithium recovery rate exceeding 95%. These results are significantly higher than the requirements set by the EU's new Battery Regulation, which mandates a nickel recovery rate of 95% and a lithium recovery rate of 80% from power battery recycled materials by 2031.

However, the existence of small workshops has its historical inevitability: in the early stages, they took on the role of collecting and distributing small batches of materials that large enterprises could not handle, and during the industry's transition toward standardization, they may not be completely eliminated.

While the scale expansion of leading companies will reshape the rules, it is not a case of "big fish eating small fish." Instead, it tends to allow each to play its role under a unified compliance framework.

In the future, some small workshops may integrate into the new ecosystem through "standardized subcontracting"—maintaining the flexibility of front-end material collection while accepting the standardized constraints of formal enterprises, becoming a supplementary link in the industrial chain.

As Zhang Yang pointed out, "By incorporating them into the formal system through long-term cooperative agreements, the non-standardized operational characteristics can be weakened. Although costs may increase slightly, the impact is minimal. Those entities that merely occupy positions or seek subsidies without core advantages will be the first to be eliminated in the reshuffling process."

Taking the collaboration between GEM and Ninebot as an example, they have initiated a lithium battery recycling business based on Ninebot's nationwide stores. In some regions, small workshops that originally engaged in scattered battery recycling took this opportunity to establish connections with Ninebot stores, either through collaboration or acquisition, becoming a complementary force to Ninebot's store battery recycling business.

The transformation behind this is the restructuring of the industry ecosystem. The layout of local resource recycling groups and state-owned capital systems such as Zhongzi Environmental is driving the formation of region-specific collaborative networks—pre-treatment centers are established in concentrated new energy vehicle production and sales areas, specialized recyclers focus on technology, and small workshops compliantly participate in subcontracting. All parties jointly enhance industry efficiency through complementarity.

The four major signals are beginning to be released.

Is the turning point coming?

Gao Gong Lithium Battery has observed that as the leading companies continue to expand their production capacities, the industry is showing four significant changes, which together indicate the approach of a turning point in the landscape.

Firstly, the acceptance of recycled materials has significantly increased.Under the push of policies such as the EU Battery Regulation, carbon emission targets and recycled material ratios have become key thresholds for exports, a trend that is forcing the market to recognize the value of recycled materials.

Although recycled materials are currently facing acceptance issues due to the discount gap, as relevant policies are implemented, the discount coefficient for recycled materials will narrow and gradually become insignificant. This will directly expand the market space for compliant enterprises.

Second, the process of standard system unification is accelerated.National standards, local standards, and group standards are gradually covering all aspects such as environmental protection, production, and product quality. In particular, the "Action Plan for Improving the Recycling System of New Energy Vehicle Power Batteries" passed at the beginning of the year specifically emphasizes the use of digital technologies to strengthen the monitoring of the entire life cycle flow of power batteries, achieving full traceability throughout production, sales, disassembly, and utilization.

Standardization as an industry imperative is being pursued by leading companies participating in standard-setting through technology output, which will gradually eradicate the short-term advantages derived from non-standardized operations.

Thirdly, industrial clusters are taking shape at an accelerated pace.Relying on core leading enterprises, regional processing centers, production bases, and technical talents are rapidly gathering to promote the localization and efficient coordination of pre-processing, smelting, and recycling.

CATL, relying on its subsidiary Guangdong Bangpu, is actively expanding its lithium battery recycling industry. In Yichang, Hubei, it has invested a total of 32 billion yuan to build the Yichang Bangpu integrated full-chain industrial park, which includes three major projects: waste battery recycling, lithium-ion battery new materials, and others.

After the project is fully operational, it can achieve the recycling and utilization of 300,000 tons of used power batteries annually, forming a complete circular chain of "battery production-use-secondary utilization-recycling and resource regeneration." This drives the development of the local lithium battery recycling industry cluster and promotes efficient local collaboration across multiple stages.

Achieving this vision requires the integration of core leading enterprises, regional centers, high-level talent, and technology, while the scaled development of leading enterprises precisely provides important support for this cluster effect.

Fourth, the capability to ensure the scalability of incoming materials has been enhanced.The steady progress in the import of black powder, combined with the surge in retired battery volumes, creates a combined effect that provides regular enterprises with a stable supply of raw materials.

On August 15th, 20 tons of recycled black powder raw material for lithium-ion batteries, imported overseas by Zihuan Green Investment International Company under China Resources Environment, arrived in Ningbo and successfully passed customs inspection.

It is worth mentioning that this is the first batch of imported recycled black powder raw materials for lithium-ion batteries in China since the implementation of the "Announcement on the Regulation of the Import Management of Recycled Black Powder Raw Materials and Recycled Steel Raw Materials for Lithium-ion Batteries," marking an important step forward in promoting the recycling and utilization of renewable resources.

Overall, the retirement wave of over one million tons in 2025 may become the last straw that breaks the old pattern. When scale efficiency triumphs over non-standardized cost control and when full-chain closed-loop replaces single-point recycling, the era of good currency in lithium battery recycling may no longer be far away.