China Turns to Used EV Batteries to Cut Imported Metal Need

China is accelerating efforts to recycle used electric vehicle batteries as a strategic move to reduce its heavy dependence on imported critical metals, with recycled materials already supplying more than a tenth of the country’s battery production needs in 2025. The initiative addresses both environmental sustainability and resource security at a time when retired power batteries are forecast to surge past 1 million tons this year.

According to a report released on June 30 by Chen Mo, an official at the China Automotive Power Battery Industry Innovation Alliance, recycled nickel, cobalt, and lithium accounted for 11%, 13%, and 5% respectively of the metals needed by China’s power-battery sector in 2025. The report projects that recycled materials could cover more than 15% of domestic battery production demand by 2030, with the potential to eventually exceed 50% as retired EV batteries accumulate.

A Wave of Retired Batteries

The push for recycling comes as China braces for a massive influx of end-of-life power batteries. Waste battery volumes rose approximately 30% to 400,000 tons in 2025, and retired power batteries are forecast to reach 1 million tons in 2026 and over 5 million tons by 2035, according to industry data cited by Caixin. The battery recycling market, valued at about 40 billion yuan in 2026, could expand to between 120 billion and 150 billion yuan by 2030.

China’s power battery sector boomed in the early 2020s, and with a typical service life of five to eight years, many batteries installed during that period are now approaching retirement. By the end of 2024, China had 31.4 million new energy vehicles on its roads, representing about 9% of the country’s automobile fleet, as China Daily reported. NEV sales reached approximately 16.5 million units in 2025, a year-on-year increase of 28.2%.

Strategic Importance of Recycling

China is the world’s largest consumer of lithium, cobalt, and nickel — all critical materials for EV battery production — yet it has limited domestic reserves of these metals. The country relies on imports from Australia and Chile for lithium, the Democratic Republic of Congo for cobalt, and Indonesia for nickel, creating significant supply chain vulnerabilities.

“China heavily relies on imports for lithium, cobalt and nickel,” said Ke Yanchun of China Resources Recycling Group Co Ltd. “Recycling retired power batteries effectively reduces the high dependency on imported resources in the upstream of China’s new energy vehicle industry.”

At the forefront of the recycling industry is Guangdong Brunp Recycling Technology, a subsidiary of battery giant CATL. Brunp claims recovery rates of 99.6% for nickel, cobalt, and manganese, and 96.5% for lithium using its proprietary Directional Recycling Technology. In 2024, the company processed more than 120,000 metric tons of end-of-life batteries.

Regulatory Crackdown and Industry Challenges

Despite the strategic imperative, China’s battery recycling industry faces significant hurdles. As of August 2025, the country had over 180,000 battery-recycling companies, with more than 60% established within the previous three years. However, less than 30% of retired power batteries are collected through formal channels, according to Bai Chunping, head of a battery recycling unit at China Resources Recycling Group.

Beijing has responded with a rapid escalation of regulatory action. In January 2026, new rules formalized Extended Producer Responsibility, making NEV manufacturers primarily responsible for battery collection and recycling. In April, five government agencies led by the Ministry of Industry and Information Technology launched a nationwide crackdown on illegal battery recycling operations. On May 13, Wang Peng, head of energy conservation and comprehensive utilization at MIIT, said the ministry was studying rules that could elevate battery recycling requirements to the level of administrative regulation.

Economic Viability Concerns

The economics of battery recycling remain precarious. Falling lithium prices have eroded recycling incentives, creating a fundamental tension: the market conditions that make recycling more affordable also make it less profitable for recyclers. Chen Xuehua, chairman of Zhejiang Huayou Cobalt Co. Ltd., noted in a March proposal to the National People’s Congress that “the entire industry is basically losing money.”

Industry participants say the sector is closely watching regulators for potential policy interventions, including pricing mechanisms that capture environmental value and subsidies to stabilize the market.

Outlook

If China succeeds in scaling up formal recycling channels, the country could significantly reduce its import dependence for critical battery metals. The coming wave of battery retirements — projected to reach 3.5 million tons by 2030 and over 5 million tons by 2035 — provides a growing feedstock that could make recycling increasingly viable.

Achieving this potential will require effective enforcement against the informal sector, stable feedstock supplies, continued technological improvements in recovery rates, and policy mechanisms that make recycling economically sustainable. As the world’s largest EV market, China’s success or failure in building a circular battery economy will have significant implications for global markets in lithium, cobalt, and nickel.