Shanxi’s Strategy to Capture the Booming Market of Retired Power Batteries Amid China’s Upcoming Surge in Electric Vehicle Decommissioning

Carbon Road China | The wave of retired power batteries is approaching, how Shanxi seizes a market worth hundreds of billions

Release Date: May 21, 2025, by China News Network

As 2024 approaches, a significant milestone is on the horizon. According to regulations from the Ministry of Industry and Information Technology and other government departments, since 2016, passenger car manufacturers have been required to provide at least an 8-year or 120,000-kilometer warranty for core components such as batteries, electric controls, and motors. This means that the large-scale retirement of power batteries from China’s first batch of new energy vehicles is officially upon us.

For Guan Nanchang, the general manager of Dinos New Energy Technology Co., Ltd., the impending “retirement wave” of power batteries signifies an opportunity to gain market leadership.

As the “heart” of new energy vehicles, the retirement of power batteries not only brings a significant recycling challenge but also gives rise to a new market valued at hundreds of billions.

Dinos is located in the new materials park of the Economic Development Zone in Lvliang and is dedicated to the recycling and regeneration of power batteries, battery swapping for new energy vehicles, and the development of emerging energy technologies. Guan believes that the rapid growth of the new energy vehicle sector will make power battery recycling an emerging industry. “We are striving to seize this opportunity and gain market control,” he stated.

Currently, there are 172,000 existing companies related to power battery recycling in China, with a steady increase in registrations over the past decade. Shanxi is no exception, as multiple cities are accelerating the establishment of a retired battery processing supply chain, aiming for a competitive edge. Companies like Dinos are capitalizing on this trend.

In the factory, retired power batteries are neatly arranged. Skilled workers are engaged in various tasks including battery pack testing, disassembly, and assembly.

Guan noted that establishing a factory in Lvliang was a strategic decision due to its favorable business environment and the relative gap in the power battery recycling sector, hoping to bridge the “last mile” of the local power battery industry.

Why Shanxi?

As a traditional energy powerhouse, Shanxi faces the dual challenge of transitioning to greener practices. Recycling retired batteries is not only a crucial step in developing new energy but also a realistic path to “recreating resources” within the green industry.

Take Taiyuan as an example; as early as 2016, this provincial capital became the first city in China to fully electrify its taxi fleet. In 2024, the first batch of power batteries for pure electric taxis will reach their end of life, totaling approximately 8,000 batteries. Dinos has collaborated with other companies to secure a ¥160 million order for the recycling of retired power batteries from Taiyuan’s taxi fleet.

Looking at the national landscape, the sales of new energy vehicles have surged from tens of thousands to millions over the past decade, leading to a significant market emerging from the lesser-known “mid-life crisis” of power batteries.

Retired power batteries are often likened to “urban mines,” vividly illustrating their potential recycling value.

“Once the capacity of a power battery declines to about 80% of its original level, it can no longer meet the stringent demands of electric vehicle usage,” explained Zhang Xiang, a researcher at the Automotive Industry Innovation Research Center of North China University of Technology. At this point, the driving range of electric vehicles may significantly decrease, leading to increased charging frequency.

The Battery Recycling Utilization Committee of the China Electronics and Energy Conservation Technology Association predicts that by 2025, the volume of retired power batteries in China will reach 820,000 tons, and from 2028 onwards, it will exceed 4 million tons. As the volume of retired batteries grows rapidly, the market value of the waste battery recycling industry is also expected to rise significantly, projected to exceed ¥280 billion.

Key to Maximizing Value: Cascaded Utilization

How can the value of a retired power battery be maximized? Testing and grading are critical steps.

Guan explained that the processing of retired power batteries at Dinos is roughly divided into three segments. The first is cascaded utilization, where batteries with a capacity drop below 80% are tested and adapted for use in other fields.

“The higher the remaining capacity of the retired battery, the broader the application scenarios,” Guan stated. This phase involves disassembly, extraction, and reorganization to create new batteries, selecting suitable cells to form cascaded products, allowing these batteries to serve in applications with lower energy density, such as electric tricycles, agricultural machinery, and streetlights.

Next comes the regeneration preprocessing and recycling, where batteries with a capacity drop below 40% undergo discharge, crushing, and sorting processes to extract materials like cathode and anode powders, copper, and aluminum. These powders are then processed through methods like hydrometallurgical recovery to reclaim valuable resources.

Despite the current maturity of battery recycling technologies, the process remains quite challenging. The steps involved, including testing and grading, disassembly, crushing, and purification, require high technical standards; any slight error can significantly affect recycling efficiency and product quality.

At present, the power battery recycling industry faces real challenges. Fluctuations in raw material prices, particularly the cost inversion of recycled lithium carbonate for battery-grade materials, have led many downstream manufacturers to prefer using new materials, squeezing profit margins in the recycling sector.

To establish a benchmark effect and guide industry development, the Ministry of Industry and Information Technology has released five batches of a “white list” of 156 compliant waste power battery utilization enterprises from 2018 to 2024, providing certain support for compliant recycling and reuse companies.

Promoting a “Green Loop” in Industry

In the context of the global energy transition, power battery recycling has become a critical component of the new energy industry chain in many countries.

For instance, the European Union has introduced the Battery and Waste Battery Directive in 2023, which has garnered significant industry attention. It imposes clear requirements regarding harmful substances, carbon footprints, recycled materials, electrochemical performance, durability, modularity, and waste management of batteries in the EU market, aiming to reduce carbon emissions throughout the battery lifecycle.

In China, a State Council executive meeting in February this year approved the Action Plan for Improving the Recycling and Utilization System of New Energy Vehicle Power Batteries, marking a commitment to strengthen the recycling and utilization of new energy vehicle power batteries and to use digital technology for monitoring the entire lifecycle of power batteries, ensuring traceability from production to sales, disassembly, and utilization.

At the local level, policies such as the Shanxi Province Plan for Promoting Large-Scale Equipment Upgrading and Consumer Product Replacement and the Shanxi Province Plan for Accelerating the Establishment of a Waste Recycling System have been introduced, tightening industry regulations at every level and raising market expectations for targeted regulatory policies.

As the retirement wave approaches, the recycling and utilization industry is at a pivotal turning point from “policy-driven” to “market-driven.” The collaborative effort across the industry chain, continuous improvement of standard systems, and steady breakthroughs in core technologies will determine the future growth and depth of this emerging sector. Constructing a sustainable, profitable circular ecosystem is now a pressing challenge for the entire new energy industry.