New Regulatory Policies for Battery Recycling in China Set to Transform the Industry

Recently, the Ministry of Commerce’s Consumption Promotion Department issued a public notice soliciting opinions on the Draft Decision to Amend the Implementation Rules for the Management of Scrap Motor Vehicle Recycling (hereinafter referred to as the Draft for Comments). This draft includes significant provisions regarding the recycling of power batteries that deserve attention.

1. New Entry and Incentive Mechanisms on the Horizon

To standardize the recycling and dismantling of scrap motor vehicles and improve management in this area, several government bodies—including the Ministry of Commerce, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, Ministry of Ecology and Environment, Ministry of Transport, and State Administration for Market Regulation—have decided to make amendments to the Implementation Rules for the Management of Scrap Motor Vehicle Recycling. For instance, the Draft for Comments adds a new clause under Article 24, stipulating that companies dismantling scrap electric vehicles must comply with industry standards, specifically the Technical Requirements for the Recycling and Dismantling of Scrap Electric Vehicles (SB/T 11238). Furthermore, Article 29 has been amended to require that dismantling enterprises must sell the power batteries they disassemble to enterprises specializing in the comprehensive utilization of used power batteries, or to recycling service points established by battery manufacturers or new energy vehicle producers.

Before the Draft for Comments was released, industry insiders indicated that a series of new regulatory policies would soon be implemented in the power battery recycling market. At the recent 2025 China Automotive Industry Development (TEDA) International Forum, Bai Chunping, General Manager of China Resource Recycling Group Battery Co., stated that by the end of 2027, the State Council will implement new policies for “white list” enterprises, including a market licensing system and points management. On May 26, a national working group for power battery recycling was officially established, led by the Ministry of Industry and Information Technology, which held its first meeting to outline related tasks. Bai noted that the meeting’s content clearly demonstrated the government’s high level of attention to this sector, with a strong focus on addressing key issues. He believes that the power battery recycling industry will develop in a more regulated and healthier direction, primarily driven by three policy initiatives:

• By the end of this year, government regulatory agencies will revise the Implementation Rules for the Management of Scrap Motor Vehicle Recycling, with one core aspect being the clarification that “vehicle and battery must not be separated.” Currently, many dismantling facilities are receiving electric vehicles without batteries. Once the revision is complete, certificates for vehicle scrapping will not be issued if the power battery is absent.
• By the end of this year, the Management Measures for the Comprehensive Utilization of New Energy Vehicle Power Batteries will be formally introduced, clearly defining the responsibilities of all parties involved, including battery production, usage, and recycling enterprises, ensuring clarity throughout the battery’s life cycle.
• By the end of 2027, a market licensing system may be implemented for existing “white list” enterprises, along with a points-based mechanism.

To regulate industry development, since 2018, the Ministry of Industry and Information Technology has released five batches of “white list” enterprises that meet the Industry Norms for the Comprehensive Utilization of Waste Power Batteries from New Energy Vehicles, totaling 156 companies. However, reports have indicated that many enterprises on the “white list” do not align their main business with their applications or have yet to commence relevant activities. Therefore, stricter management of these “white list” enterprises is essential. Additionally, these companies have a combined annual production capacity exceeding 1 million tons, with planned processing capacity over 4.25 million tons; however, many are not operating at full capacity, leading to significant idle resources.

2. Strengthening Regulatory Networks with Enhanced Policies

The revision of these Implementation Rules serves to complete the regulatory framework for power battery recycling. To promote orderly and healthy industry development, both national and local governments have issued several targeted policy documents this year. Notably, the Industry Norms for the Comprehensive Utilization of Waste Power Batteries from New Energy Vehicles (2024 Edition), effective from January 1, further refines management requirements for cascading and regenerative utilization, and strengthens safety and environmental responsibilities.

Several aspects of the Industry Norms are noteworthy:

• First, the technical indicators for lithium recovery during the smelting process have been raised from a minimum of 85% to 90%, and new indicators have been added, including a recovery rate of no less than 98% for electrode powder after crushing and a maximum aluminum impurity content of 1.5%, guiding enterprises to enhance technical innovation and improve process standards.
• Second, standards and norms have been updated, adding specifications for the recycling and dismantling of automotive power batteries and coding rules, in line with updated requirements from the General Industrial Solid Waste Storage and Landfill Pollution Control Standards.

In February, the State Council’s executive meeting approved the Action Plan to Improve the Recycling and Utilization System for New Energy Vehicle Power Batteries, aimed at addressing bottlenecks and establishing a standardized, safe, and efficient recycling system. This plan emphasizes the use of digital technology to enhance monitoring of power batteries throughout their life cycle, ensuring traceability from production to sales, dismantling, and utilization. Moreover, on June 10, the Ministry of Ecology and Environment and five other ministries released an Announcement on the Management of the Import of Recycled Black Powder and Steel Raw Materials for Lithium-Ion Batteries, extending the regulatory chain to upstream international resource flows. This aligns with the “strengthening full-chain management” principle emphasized in the Action Plan.

The Announcement sets clear import thresholds and environmental standards for key intermediate products like recycled black powder, sending a strong policy signal that encourages and guides the adoption of high-tech, environmentally friendly recycling models. This helps optimize market competition, directing resources toward technologically advanced and well-managed enterprises while accelerating the elimination of outdated capacities.

At the local policy level, on April 22, Sichuan Province issued the Interim Measures for the Management of the Recycling and Utilization of Waste Power Batteries from New Energy Vehicles; on May 21, Chongqing City released the Action Plan for Comprehensive Green Transition in Economic and Social Development (2025-2027); and on May 27, Guangdong Province published the Work Plan for the Construction of a “Waste-Free City” Across Guangdong. In a recent industry meeting, Yang Qingyu, an industry researcher at the Beijing Green Intelligent Energy Technology Research Institute, noted that China’s power battery recycling policy system is accelerating towards completion, characterized by “stricter regulations, refined standards, decentralized supervision, and solidified responsibilities,” especially entering a critical phase for systematic normalization and efficiency enhancement after 2023.

3. Moving Towards a Scaled and Globalized New Phase

A report from Zhiyan Consulting titled Market Research and Future Trend Forecast of China’s Power Battery Recycling Industry indicates that the development of China’s power battery recycling sector can be divided into three stages:

• During the Initial Exploration Period, the new energy vehicle industry was just beginning, and power battery recycling issues were emerging, but there were no policy standards, technology was immature, corporate participation was low, and recycling channels were scattered, leading to resource waste and environmental risks.
• In the Policy Standardization Period, as the number of new energy vehicles surged, the government introduced relevant policies to clarify the Extended Producer Responsibility system, standardizing recycling qualifications and processes, thereby establishing a recycling system. The industry began to move towards normalization, yet coverage of the recycling network and commercial efficiency still needed improvement.
• Since 2018, the power battery recycling industry has entered the Explosive Growth Period. As the penetration rate of new energy vehicles increases and the scale of decommissioned batteries grows, coupled with fluctuating resource prices, the industry is experiencing rapid development. Technological breakthroughs are enhancing recycling efficiency, and policies are positioning recycling as a key supported area within the green industry chain. Leading enterprises are accelerating their market presence, creating a diverse competitive landscape, with trends toward scaling and specialization emerging.

According to the 2025-2030 Strategic Analysis and Supply-Demand Pattern Research Report for the Development of China’s Power Battery Recycling Industry, the actual recycling volume of power batteries in China rose from 129,000 tons in 2019 to 300,000 tons in 2022, reaching 324,000 tons in 2023, and is expected to exceed 380,000 tons in 2024. Driven by continuous growth in new energy vehicle sales and the concentration of early power battery retirements, the actual recycling volume in China is projected to surpass 500,000 tons by 2025. As the power battery recycling market expands, various stakeholders—from upstream mining in the lithium battery supply chain to midstream battery manufacturers and downstream new energy vehicle producers—are actively positioning themselves in this field.

Yang Qingyu pointed out that the current power battery recycling industry is at a critical stage marked by intensified domestic competition and the beginning of overseas expansion. On one hand, the number of domestic enterprises has surged, leading to explosive growth in new capacity and fiercer competition; on the other hand, some companies are attempting to “go abroad” to expand recycling channels, but they face multiple challenges, such as complex overseas regulations, stringent environmental approvals, and difficulties in supply chain collaboration.

Examining international regulatory frameworks, the EU’s Battery Law sets clear requirements on battery traceability, battery passports, and the use of recycled materials in batteries. Similarly, the United States and Japan have stringent regulations in related areas. China holds a first-mover advantage in the new energy vehicle sector and should play a more leading role in the formulation of international rules for power battery recycling.

Given this context, implementing new industry regulations such as market licensing and points management for current “white list” enterprises is both necessary and timely. Industry experts suggest that the market licensing system will filter out enterprises that truly possess technological capabilities, environmental competence, and management standards through stricter entry criteria, eliminating those that do not comply with regulations or pose safety or environmental risks, thus purifying the market environment and enhancing the overall industry level. The introduction of a points management mechanism serves as an innovative incentive tool, encouraging companies to adopt advanced recycling technologies and processing methods, thereby increasing resource recovery rates and reducing environmental pollution.