Summary of Key Points
As the number of new energy vehicles in China approaches 50 million, the early-generation batteries are beginning to be retired en masse. By 2025, the amount of waste batteries to be comprehensively recycled is expected to exceed 400,000 tons, and this figure is projected to rise to over 1 million tons per year by 2030. However, the recycling industry faces a dilemma where legitimate companies struggle to meet demand, while informal operators dominate the market: legitimate enterprises have only a 15% capacity utilization rate, and their recycling efficiency ranges from 20% to 50%. Informal channels, on the other hand, pose safety (fire hazards) and environmental (pollution) risks due to their low-price bidding and unauthorized dismantling practices. At the policy level, the concept of "tiered utilization" of batteries has been abandoned due to safety concerns, and direct recycling for metal recovery has become the new approach. In the future, it will be necessary to strengthen corporate responsibility, upgrade technologies, optimize battery design from the outset, and educate consumers to ensure that batteries are recycled through legitimate channels.
Why Was Tiered Utilization Abandoned?
The main reason for abandoning tiered utilization is the significant safety risks associated with these batteries. Previously, retired batteries (which still contained some usable electricity but had reduced capacity) were repurposed in low-speed electric vehicles and energy storage devices. However, this practice encountered numerous issues:
- Mixed Sources and Unreliable Quality: Batteries from different brands and models varied in specifications and levels of degradation, making them prone to malfunctioning after simple refurbishment.
- Frequent Safety Incidents: According to CCTV reports, approximately 33% of electric bicycle fires in 2026 were caused by illegally modified batteries, with 80% of these batteries coming from waste power sources.
- Policy Change: The "Interim Measures" implemented in April 2026 officially eliminated tiered utilization, and related policies were further repealed in July, meaning that retired batteries must now be directly dismantled for metal recovery.
Legitimate Recycling Companies Struggle to Meet Demand
China has a legitimate recycling capacity of 4.23 million tons per year, but the actual recycling volume in 2024 was only 654,000 tons, resulting in a capacity utilization rate of just 15%. The reasons for this include:
- Inferior Competition from Informal Channels: Small workshops and scalpers offer higher prices (10%-15% higher than legitimate companies) and use cash transactions and door-to-door collection services to attract repair shops, used car dealers, and even individual consumers.
- Mismatch between Capacity and Supply: Most retired batteries are located in the eastern coastal regions, where new energy vehicles are prevalent, while recycling facilities are concentrated in central provinces. The high transportation costs (50%-100% higher than for regular cargo) prevent these factories from processing enough batteries.
- Lack of Consumer Awareness: 48% of respondents were unaware of the proper channels for disposing of old batteries, making them vulnerable to scams by scalpers.
Why Can Informal Recyclers Bid Low?
Informal recyclers avoid many of the costs associated with legitimate recycling:
- Safety and Environmental Expenses: Legitimate facilities must invest in environmental protection equipment (5%-8% of total costs), and the dismantling process is more expensive due to stricter regulations. In contrast, small workshops dismantle batteries crudely, ignoring potential electrolyte leaks that can contaminate soil and water, as well as the risk of battery explosions.
- Transportation and Storage Compliance: Legitimate recycling requires specialized transportation and compliance documentation, while informal operators use regular trucks, saving on transportation costs.
- Traceability and Regulation: Legitimate companies must report battery movements through a national tracking system, whereas informal operators operate in secret to evade regulation.
How to Get Batteries Back onto the Right Track?
Experts recommend a multi-pronged approach involving policy, technology, and design improvements:
- Short-term: Strengthen Regulation: Enforce the "Interim Measures" by requiring car manufacturers and battery companies to recycle their products. Repair shops and scrap yards must dispose of batteries through legitimate recycling centers; otherwise, they will face penalties. Improve the full lifecycle tracking of batteries.
- Medium-term: Technological Upgrades: Current methods involve physical dismantling followed by wet metallurgy (98% metal recovery rate), but there is room for improvement to direct regeneration of cathode materials, eliminating intermediate steps and reducing energy consumption and pollution.
- Long-term: Optimize Battery Design: Battery manufacturers and car companies should design batteries that are easier to dismantle, such as using standardized modules and minimizing the use of adhesive welding, to reduce recycling costs.
- Consumer Participation: When scrapping vehicles, ensure that batteries are handed over to authorized dismantling companies and not sold to scalpers. Consumers should also be more informed about recycling options provided by car manufacturers.
What Should Ordinary Car Owners Do?
Here are three key recommendations:
1. Avoid Scalers: If someone offers to buy old batteries at a high price, be cautious; they are likely from informal channels that can pose safety risks.
2. Use Official Channels: When scrapping a vehicle, take it to a licensed recycling facility. When replacing batteries individually, have the 4S store or car manufacturer handle the recycling (they are obligated to do so).
3. Monitor Recycle Practices: Ask where your old batteries are being taken and urge companies to disclose their recycling processes to ensure public oversight.
In summary, the recycling of power batteries is a critical issue that affects both safety and environmental sustainability. If not managed properly, it can undermine the environmental benefits of new energy vehicles. Only by establishing a reliable recycling system can old batteries be transformed into a valuable resource rather than a source of pollution.