China’s EV Success Faces A Battery Recycling Problem – Analysis
By Yifei Li
China’s electric vehicle (EV) industry has experienced an unprecedented surge in production and global dominance. But a new challenge looms — the growing wave of decommissioned vehicles as EV batteries reach the end of their lifecycle.
This emerging trend is spawning a burgeoning sub-market for recycling and repurposing used batteries. The critical question is whether China is prepared to extend its EV leadership into the post-consumer segment of the supply chain.
When record-keeping began in 2012, China produced just 13,000 EVs. By 2018, that figure grew nearly tenfold to 115,000 and expanded another tenfold to 1.2 million in 2024. This meteoric rise is widely attributed to state-backed policies, including investments in research and development, tax rebates and infrastructural subsidies. As of October 2024, Chinese firms dominate 76 per cent of the global EV market, making China the undisputed leader in the sector.
At first glance, China appears well-positioned to lead in battery recycling. Yet the very factors that drove its rapid ascent in EV manufacturing — speed, scale, competitiveness and technological sophistication — are also introducing unique hurdles to its expansion into this market segment.
The unprecedented speed of China’s EV development has outpaced the establishment of regulatory and informational frameworks. Unlike the European Union, where detailed legislationgoverns producer responsibilities, battery lifecycle tracing and supply chain due diligence, China’s regulatory infrastructure remains underdeveloped. This gap is particularly evident in the EV battery recycling sector, where success depends on a level playing field supported by clear and accountable regulations.
The competitive nature of China’s EV market, which has spurred innovation across the supply chain, also complicates the landscape. The hyper-competitive industrial ecosystem is characterised by a multitude of market players, along with their subsidiaries and countless unofficial shadow affiliates. A substantial portion of the EV battery recycling supply chain operates in the shadows, beyond the reach of regulatory oversight.
Between 2018 and 2023, China’s Ministry of Industry and Information Technology certified 156 firms to process decommissioned EV batteries, while over 40,000 companies hold business licenses for this activity. With fewer than four in 1,000 used EV batteries processed by certified recyclers, there is a clear need for more rigorous oversight.
China’s technological prowess has been a cornerstone of its EV industry’s success, but it has outpaced the development of essential technical standards. The country, which holds 44 per centof the world’s EV-related patents, has made significant advancements in innovation. But key areas, such as estimating the remaining useful life of EV batteries and establishing reporting requirements for recycling, remain unstandardised.
Although China has the ambitious goal to peak carbon emissions by 2030 and achieve carbon neutrality by 2060, the lack of a standardised framework for carbon accounting across the EV lifecycle leaves the environmental impact of EV batteries largely speculative. This gap undermines efforts to align the industry with its sustainability objectives.
Despite these challenges, China has two unique advantages — the scale of its market and the potential for a nationally coherent regulatory framework.
China’s massive market size is a critical asset. Recycling EV batteries requires significant upfront investment and is subject to market volatility, particularly in the pricing of critical minerals like lithium carbonate, which experienced a tenfold price swing between 2020 and 2022. China’s scale ensures that the market remains viable in the long term even with slim profit margins and hyper-competition.
More importantly, the Chinese state has the potential to establish a unified market infrastructure. A robust framework would include mechanisms for enforcing producer responsibilities, tracking carbon footprints, standardising technical guidelines and ensuring transparency through reliable reporting, monitoring and verification systems. While progress has been made, the success of China’s EV battery recycling efforts will depend on the state’s ability to implement fair, accountable and transparent regulations.
China’s extraordinary EV boom over the past decade has built a vast, innovative and globally dominant supply chain. As the industry expands into the post-consumer segment, the sustainability promise of this boom will depend on the industry’s capacity to responsibly manage post-consumer EV components.
The robust development of the post-consumer segment serves as the true litmus test for the greenness of EVs, requiring concerted efforts to build the necessary legal, regulatory, technical and logistical infrastructure. With its scale and potential for regulatory cohesion, China can lead a global revolution in EV battery recycling. But whether it can seize this opportunity will depend on decisive state and industry action in the years to come.
- About the author: Yifei Li is Assistant Professor of Environmental Studies at NYU Shanghai and Lead Author of China Goes Green: Coercive Environmentalism for a Troubled Planet (Polity, 2020).
- Source: This article was published at East Asia Forum