Since 2026, China’s new regulations on power battery recycling have officially taken effect, accelerating the standardized development of the industry. At the same time, as the global energy transition continues, international green trade barriers are becoming increasingly stringent. Combined with geopolitical tensions and fluctuations in mineral resources, these factors are pushing China’s new energy industry into a critical stage of overseas expansion where opportunities and challenges coexist.
Recently, the second meeting of the national task force on the recycling and utilization of power batteries for new energy vehicles was held. The meeting emphasized that 2026 marks the first year of China’s 15th Five-Year Plan and is also a key year for implementing the Action Plan for Improving the Recycling and Utilization System for New Energy Vehicle Power Batteries. The meeting noted that China’s new energy vehicle power batteries have entered a stage of large-scale retirement, making it both urgent and important to accelerate the establishment of a sound recycling and utilization system for used power batteries.
According to statistics, the volume of retired power batteries from new energy vehicles in China is expected to reach 43 GWh in 2026. By 2030, this figure is projected to rise to 171 GWh, meaning that approximately 3 million new energy vehicles will reach the end of their service life.
Several industry insiders told China Business Journal that the competitive advantages of Chinese battery companies expanding overseas have undergone a major upgrade. Their strengths have evolved from early advantages in cost and technology to comprehensive capabilities in full industry chain integration, systematic implementation, and circular ecosystem development. As the first large group of new energy vehicles in China enters the retirement cycle, power battery recycling volumes are expected to grow rapidly over the next few years. Companies therefore need to prepare recycling capacity and overseas recycling systems in advance to seize opportunities in the global circular economy.
To explore how China’s power battery recycling industry can overcome excessive domestic competition and break through overseas barriers, reporters interviewed a number of industry professionals. Discussions focused on the effectiveness of policy implementation, challenges in consumer-side recycling, and difficulties related to overseas technologies and standards, offering a review of the industry’s current development and possible directions for high-quality growth.
Deep Restructuring of the Industry Landscape
The global automotive industry and the new energy power battery supply chain are undergoing historic changes. On the one hand, annual global vehicle sales remain stable at around 90 million units, with significant growth potential in emerging automotive markets such as India, Southeast Asia, and South America. On the other hand, key upstream mineral resources for power batteries, including lithium, cobalt, and nickel, are highly concentrated geographically. Geopolitical conflicts in major mineral-producing regions such as the Middle East and Africa have become more frequent, while raw material prices continue to fluctuate sharply, increasing supply chain risks across the global new energy industry. Together with the implementation of China’s revised Measures for the Administration of Used Power Batteries in 2026, which has significantly tightened domestic regulatory oversight, these internal and external factors are reshaping the industry landscape.
From the perspective of global upstream resources, the key raw materials used in power batteries depend heavily on a limited number of mineral-producing countries, making the supply chain inherently vulnerable. Continued geopolitical conflicts have disrupted raw material supplies, leaving global automakers and battery manufacturers exposed to long-term supply interruption risks. Since the materials contained in power batteries can be recycled repeatedly, battery recycling has become an important means of reducing resource constraints.
Cui Dongshu, Secretary-General of the China Passenger Car Association, told reporters that the global distribution of key mineral resources for power batteries is highly uneven, while frequent geopolitical conflicts have further increased upstream supply risks. However, the minerals contained in power batteries can be continuously recycled. As China’s first large group of new energy vehicles enters the retirement cycle, used power batteries can effectively replace some primary mineral resources and reduce the domestic new energy industry’s dependence on imported minerals.
At the same time, power battery recycling is expected to become a second growth engine for companies. Cui Dongshu said, “The average gross profit margin of the power battery recycling sector has reached 27%, higher than that of core businesses such as battery manufacturing and energy storage. It serves not only as a safeguard for supply chain security, but also as a new source of profit growth for automakers and battery companies.”
Gaps in Domestic Circulation and Rising Overseas Trade Barriers
Although China’s power battery recycling industry has the world’s largest market scale, the most complete industrial chain, and advanced recycling technologies, several industry insiders agree that the sector still faces three major challenges: difficulty in controlling domestic battery sources, high compliance pressure overseas, and limited influence over global industry standards. Additional issues, including mismatched consumer perceptions, difficulties in implementing automakers’ responsibilities, and differences between Chinese and overseas battery technology routes, are also creating significant obstacles to high-quality industry development.
Zhu Weiwang, a project director at Greenpeace, told reporters that the biggest challenge facing China’s power battery recycling sector is not insufficient back-end dismantling and processing capacity, but rather the fragmentation of battery sources at the front end, with large quantities of retired batteries flowing into informal channels. At the consumer level, there are three major perception gaps: only 13.1% of consumers are aware that vehicle manufacturers bear the primary responsibility for power battery recycling, showing a significant disconnect between public understanding and policy design; when consumers choose recycling channels, price and process convenience carry nearly equal weight, rather than price being the sole factor; and consumers’ greatest concerns about recycled batteries are safety and performance stability, meaning that environmental benefits alone are insufficient to persuade end users.
One industry insider said that the current traceability system can only effectively monitor batteries at the vehicle manufacturer’s factory-exit stage. Regulatory blind spots remain in three areas: used vehicle circulation, scattered battery replacement at repair shops, and private sales by individual vehicle owners. As a result, loopholes allowing retired batteries to enter informal channels remain difficult to close, while legitimate recycling companies are reluctant to expand capacity aggressively due to uncertainty over battery supply.
Another industry insider noted that unlicensed informal recyclers do not bear the same environmental compliance costs or traceability obligations as legitimate companies, allowing them to offer significantly higher purchase prices. At the same time, informal dismantling can generate large amounts of hazardous electrolyte waste and heavy-metal wastewater, creating serious risks of soil and water pollution.
Another industry observer pointed directly to a core structural problem: although a complete closed-loop regulatory framework has already been established at the policy level, it fails to fully account for the high resource value of power batteries. Administrative supervision alone cannot completely block informal circulation channels. The fundamental issue lies in an imbalance in the industry’s profit distribution mechanism. As long as opportunities for arbitrage remain in informal channels, black-market battery transactions will be difficult to eliminate entirely. In addition, the EU Battery Regulation has become one of the most significant compliance barriers for Chinese new energy companies expanding overseas. Full-chain carbon footprint traceability and the comprehensive implementation of extended producer responsibility (EPR) throughout the product lifecycle have substantially increased compliance costs for Chinese battery and vehicle companies entering overseas markets.
An executive at a power battery recycling company told reporters that the EU Battery Regulation clearly requires the proportion of recycled materials used in batteries to increase in stages in 2031 and 2036. However, Europe has not yet entered a period of large-scale battery retirement, and local recycling capacity and recycled material supply remain insufficient. As a result, Chinese companies expanding overseas may be forced to bear future end-of-life battery disposal costs in advance, further increasing operating pressure abroad.
Some industry professionals have pointed out that Chinese companies have long been in a reactive position, adapting to overseas recycling regulations and industry standards. In the global competition surrounding energy supply chains, China has therefore remained more of a follower, while its advantages in technology and production capacity have yet to be transformed into influence over global rules and standards. This has become a major bottleneck limiting the globalization of China’s recycling industry.
Joint Overseas Expansion to Strengthen China’s Global Circular Economy Competitiveness
Several interviewees believe that individual companies have limited ability to withstand risks when expanding overseas independently. Automakers may lack familiarity with overseas recycling policies, battery manufacturers may lack local channels, and recycling companies may lack stable battery sources. Operating independently therefore creates high trial-and-error costs. The industry needs to break down barriers across the industrial chain and promote coordinated overseas expansion among automakers, battery manufacturers, and recycling companies. Europe and Southeast Asia should be prioritized as two key high-potential markets, with localized closed-loop industrial chains covering recycling, cascade utilization, and material regeneration established according to local conditions.
A recycling business director at a leading power battery company supported this approach, noting that automakers can obtain retired batteries from their existing vehicle fleets, battery manufacturers can reuse recycled materials within their own closed-loop systems, and recycling companies can handle local dismantling operations. This three-party collaboration model can significantly reduce the overall cost of overseas recycling compared with companies expanding independently.
One industry insider suggested that Chinese companies should remain flexible when expanding overseas and make use of overseas industrial parks to establish demonstration bases covering the entire industry chain, from mineral resources and battery manufacturing to recycling and material regeneration. By presenting commercially viable and practical industry cases, Chinese companies can demonstrate the strengths of their recycling technologies and business models in overseas markets and use practical experience to support the development of local recycling networks.
Another industry insider told reporters that administrative supervision alone cannot eliminate black-market circulation and that market-based economic incentives must also be improved. Regulators should introduce more market-oriented guidance measures, such as subsidies or tax reductions based on the proportion of recycled materials used by companies. Such policies could improve the profitability of legitimate recycling channels, narrow the price gap with informal channels, and help retain retired batteries within regulated recycling networks.
Others suggested that companies should establish four consumer-facing recycling service systems covering access, trust, execution, and feedback. Recycling and delivery procedures should be simplified, while battery traceability information and processing progress should be made transparent to reduce barriers for consumers using formal recycling channels. At the same time, the responsibilities of automakers, recyclers, and vehicle owners should be clearly defined to avoid the unlimited expansion of producer responsibilities. Mature, market-oriented local recycling networks should also be used to achieve efficient battery collection.
Regarding the future development of the industry, Cui Dongshu proposed three practical recommendations. First, automakers, battery manufacturers, and recycling companies should expand overseas together, focusing on Europe and Southeast Asia to establish localized circular industry chains. Second, China should export its mature hydrometallurgical recycling technologies and full lifecycle management experience, turning overseas compliance pressure into a driving force for domestic industrial upgrading. Third, China should leverage its large industrial scale and extensive practical experience to promote Chinese recycling standards as globally applicable industry standards. He also noted that, as trade protection policies continue to intensify, localized production capacity has become an essential path for Chinese companies seeking to overcome trade barriers.
— Source: China Economic Net