Key facts
- Global EV battery recycling capacity is underused due to slower adoption and China's supply chain dominance.
- China prioritizes metal recovery from EV batteries, while the West extends their use for grid storage.
- Nickel and cobalt are the most valuable metals for recycling, driving the profitability of battery recovery.
- Lithium-iron-phosphate batteries, common in China, lack valuable metals and are unprofitable to recycle without regulatory mandates.
- China's EV battery recycling industry is rapidly growing, with over 30,000 new enterprises registered in 2025.
Worldwide recycling capacity for electric vehicle batteries remains underutilized due to slower-than-expected EV adoption and a concentration of the supply chain in China. While China has shifted its regulations to prioritize metal recovery from end-of-life batteries, the U.S. and Europe are extending the useful life of these batteries for grid storage before they are disassembled.
This divergence stems from the differing compositions of EV batteries. Batteries rich in nickel and cobalt are valuable for recycling, whereas cheaper lithium-iron-phosphate batteries, prevalent in China, offer little profit. This allows Western countries to delay recycling while they build their capacity.
In China, the surge in EV sales has led to a growing volume of aging batteries. This has fueled a gray market for recycling, even as regulators and companies work to establish more formal systems. By late 2025, nearly 60% of new cars sold in China were electric or plug-in hybrids, contributing to a significant increase in retired batteries.