With the rapid expansion of the new energy vehicle (NEV) market, the wave of power battery recycling is now approaching. As these batteries reach the end of their life cycle, the growing demand for efficient and sustainable recycling solutions presents both opportunities and challenges for China’s recycling infrastructure and technological capabilities.
Over the past few years, the global NEV market has experienced significant growth. In 2015, global sales reached 528,000 units, rising to 770,000 in 2016—a 42% year-on-year increase. By November 2017, sales had already surpassed 1 million units, with annual estimates exceeding 1.1 million. By 2020, it is projected that global NEV sales will hit 3 million units, marking a substantial shift in the automotive industry.
China has emerged as the world leader in NEV adoption. In 2016, the country sold over 507,000 NEVs, and by November 2017, this number had risen to 609,000, reflecting a 51.4% year-on-year growth. With plans to reach 2 million units in production and sales by 2020, the number of NEVs on Chinese roads is expected to surpass 5 million. This surge in NEVs means that power battery waste will soon become a critical issue.
As these vehicles age, some power batteries are beginning to reach their retirement phase, prompting urgent calls for effective recycling systems. Industry forecasts suggest that by 2020, the volume of lithium-ion power batteries will reach 32.2 GWh—approximately 500,000 tons. The total lithium battery recycling market is expected to be worth 15.6 billion yuan by then, and by 2023, the amount could rise to 101 GWh, or about 1.16 million tons.
The first wave of power battery retirements is expected to begin in 2018, with a sharp increase in the following three years. According to projections, the lithium battery recycling market could reach 156 billion yuan by 2020, growing at a compound annual rate of 40.84% between 2017 and 2020.
There are two main approaches to power battery recycling: ladder use and disassembly recovery. After several charge cycles, a power battery's performance may drop below 80% of its original capacity, making it unsuitable for use in electric vehicles but still viable for less demanding applications such as energy storage systems, distributed solar power, or low-speed electric vehicles. This is known as "ladder utilization." When the battery can no longer meet even these lower demands, it enters the disassembly and recycling stage.
Currently, ladder utilization dominates the recycling market, but the diversity in battery types and sizes poses technical and logistical challenges. Companies must invest heavily in R&D to improve efficiency and reduce costs. Meanwhile, government support for innovation is crucial to advancing the industry.
Disassembly and recycling, though more complex, represent the final stage of the battery lifecycle. It ensures that materials are recovered safely and sustainably. However, current recycling technologies still need further development to make this process economically viable and environmentally sound.
China's power battery recycling market holds immense potential, but the current scrap volume remains low. Recycling channels and systems are still underdeveloped, and companies are in the early stages of building up their technological capabilities. As the volume of retired batteries increases, it will be essential to develop better business models and accelerate progress in recycling, transportation, and reuse.
The power battery recycling landscape is gradually taking shape. Two main technical routes are currently being explored: dry metallurgy and hydrometallurgy. While hydrometallurgical methods have been successfully applied to consumer-grade lithium batteries, the application of similar techniques to power batteries is still in the experimental phase.
As more attention is given to lithium battery recycling, major players across the NEV supply chain are expanding into this space. A tripartite structure is emerging, involving lithium battery material suppliers, power battery manufacturers, and third-party recycling firms. This collaboration helps extend the industrial chain, enhance competitiveness, and secure raw material supplies.
From the perspective of power battery systems, setting up recycling channels through self-development or partnerships can help ease pressure from rising material costs and falling vehicle prices. For lithium battery material companies, recycling not only diversifies raw material sources but also reduces procurement costs and improves profitability.
In addition, resource recycling enterprises and material producers have key advantages in the recycling process. Recycling channels are mainly managed by auto repair shops, battery manufacturers, and vehicle dismantling companies. While battery companies and OEMs often limit their recycling efforts to their own products, third-party recyclers tend to have broader networks and more comprehensive strategies.
Despite these developments, environmental risks remain high. Many NEV manufacturers have yet to implement effective recycling programs, relying instead on battery suppliers to handle the process. This lack of accountability can lead to improper disposal, potentially causing pollution from heavy metals and organic compounds.
Although NEVs are considered eco-friendly, the recycling of their power batteries requires careful management. A robust regulatory framework is needed to ensure safe and efficient recycling. Currently, the traditional vehicle scrapping system is plagued by inefficiencies, with many scrap cars and lead-acid batteries being handled informally. This lack of oversight leads to uncontrolled waste and environmental harm.
To address these issues, the Chinese government has introduced a series of policies aimed at regulating power battery recycling. These include the "Energy Conservation and New Energy Vehicle Industry Development Plan (2012–2020)" and the "Guiding Opinions on Accelerating the Promotion and Application of New Energy Vehicles."
Since 2016, the Ministry of Industry and Information Technology has issued several documents outlining recycling standards, responsibilities, and supervision mechanisms. In May 2017, the "Code for the Dismantling and Disassembly of Vehicle Power Batteries" was officially released, becoming the first national standard for vehicle power battery recycling.
While these standards have improved industry practices, they do not yet cover all battery sizes and models. Industry experts believe that future policy efforts should focus on standardization while allowing room for differentiation to maintain market competitiveness.
Looking ahead, the power battery recycling market is expected to take shape by 2018. As recycling companies scale up, they may achieve greater profitability. Analysts predict that while short-term breakthroughs may be limited, the integration of upstream and downstream industries is accelerating, signaling a promising future for the sector.
However, the success of this industry will depend largely on the implementation of clear regulations and industry standards. Only with strong governance can the power battery recycling sector grow sustainably and responsibly.
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