China's EV Battery Recycling Revolution: Lessons for the US Market

China's electric vehicle battery recycling market is entering a major growth phase and is already far larger, more coordinated, and more standardized than what exists today in the United States. As the world's leading EV market, China's recycling ecosystem provides valuable insights into what may emerge domestically as US EV volumes scale and battery retirement waves begin.

This analysis draws from a comprehensive report published by China's Ministry of Industry and Information Technology (MIIT), which provides detailed insights into the current state of the country's battery recycling industry. For the original article, see: China's EV Battery Recycling Market Analysis (163.com).

With over 300,000 tons of retired batteries processed annually and a market valued at approximately 48 billion yuan (around $6.5 billion USD), China's recycling infrastructure offers a roadmap for addressing the challenges and opportunities that lie ahead for US stakeholders.

Battery Retirement Timelines: Similar Expectations, Different Scale

China's battery retirement patterns mirror US expectations closely. Most OEM warranties cover batteries for about 8 years or 150,000 kilometers, with useful automotive life declining below 80% capacity. This aligns perfectly with US industry standards and warranty terms.

However, the scale difference is striking. China is already handling massive volumes of retired batteries annually, while the US is still in the early stages of its retirement curve. This volume advantage gives Chinese recyclers economies of scale that US operators can only dream of currently.

Second-Life Applications: Proven at Scale

China's approach to retired battery utilization follows the same two primary pathways as US industry concepts: second-life applications and material recycling.

For second-life uses, retired packs find new purpose in municipal street lighting, electric scooters, low-speed mobility solutions, and backup power systems. The key difference is execution scale—China has deeply integrated these applications into existing infrastructure networks, from city lighting systems to massive delivery scooter fleets.

The US market has promising pilots and early deployments but lacks the volume and standardization that China has achieved. This represents both a challenge and an opportunity for American companies to learn from China's experience.

Commodity Price Volatility: A Global Challenge

Lithium carbonate pricing plays a critical role in recycling economics worldwide. After spiking to 600,000 yuan per ton in 2022, prices collapsed below 80,000 yuan in 2025, severely impacting profit margins across China's recycling sector.

US recyclers face identical commodity price pressures, but the impact is mediated by different market dynamics. The US industry remains smaller and more dependent on federal incentives like IRA Section 45X tax credits and 30D critical minerals requirements. China's larger market and numerous participants create more chaotic price competition than exists in the more regulated US environment.

The Informal Sector Challenge: China's Structural Problem

China officially recognizes 148 MIIT-approved recyclers, but thousands of informal workshops compete aggressively by ignoring environmental compliance costs. These unregulated operators can offer higher prices for retired batteries, diverting feedstock from approved facilities.

This creates a stark contrast with the US market. American environmental enforcement is much stronger, with fewer informal players. However, the US faces its own structural challenge: underdeveloped collection infrastructure and inconsistent feedstock supply. China's problem is oversupply of processing capacity with insufficient regulation; the US problem is insufficient infrastructure amid slow volume growth.

Profitability Challenges: Different Root Causes

China's approved recyclers struggle with profitability due to three main factors: feedstock diversion to informal buyers, depressed metal prices, and excess processing capacity relative to available battery volume.

US recyclers face similar profitability challenges but for different reasons. The primary constraint is insufficient input volume, as EV retirement volumes remain below scale. Federal incentives provide crucial support that Chinese operators largely lack, though both markets rely on improving economics through increased volume.

Adapting to New Chemistries: China Leads the Transition

China is already anticipating the rise of semi-solid and solid-state batteries, recognizing that current recycling equipment may become obsolete. This forward-thinking approach could give Chinese recyclers a competitive advantage in future battery technologies.

The US lags behind in this transition. Most American recycling facilities currently under development are optimized for today's lithium-ion chemistries. China's early recognition of upcoming technological shifts provides valuable lessons for US operators preparing for similar transitions.

Government Standardization: China's Top-Down Approach

China has issued 22 national recycling standards covering the entire lifecycle from disassembly and testing to black-mass refining. This comprehensive standardization provides clear guidelines and quality benchmarks for the industry.

US federal standards remain fragmented across EPA, DOT, and state-level regulations. The US lacks unified national guidelines for battery collection, testing, and traceability. China's centralized approach contrasts sharply with America's more decentralized, market-driven model.

The Path to Scale: Shared Expectations, Different Timelines

Both countries believe that scale will ultimately improve recycling economics. China expects costs to decline and profitability to improve as more EVs reach retirement age, with analysts predicting stability as standards enforcement strengthens.

The US shares these expectations but operates on a slower timeline. American stakeholders may benefit from China's early learning curve—many challenges China faces today will likely emerge in the US within three to five years.

Strategic Implications for US Stakeholders

China's experience offers critical strategic insights for US companies, investors, and policymakers. The key lessons include the importance of scale for economic viability, the need for comprehensive standardization, and the challenges of balancing environmental compliance with market competition.

As US retirement volumes grow, operators should study China's successes and failures. The informal sector competition, commodity price volatility, and technology transition challenges that China faces today will likely appear in American markets soon. Proactive preparation will be essential for capturing the opportunities in this emerging trillion-dollar global market.