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Trends in China's Lithium-Battery Recycling Market

The new energy vehicle industry is a strategic emerging industry of national importance in China. With robust policy support and proactive guidance, it has entered a phase of rapid development. Data shows that China's new energy vehicle sector has experienced significant growth since 2012, with production soaring from 12,500 units in 2012 to 1.2207 million units in 2018—a compound annual growth rate of 114%. As the period for retiring installed power batteries from vehicles from 2012 to 2014 approaches, 2018 was widely recognized by the industry as the inaugural year of the power battery retirement wave. However, the actual volume of retired power batteries collected in the market did not reach a "small peak," and some batteries still remain unrecycled or underutilized effectively. According to GGII statistics, the total amount of retired power batteries in 2018 reached 74,000 tons, while the total scrapped digital batteries amounted to 167,000 tons. Yet, currently, the market's capacity to recycle retired power batteries falls far short of expectations. In 2018, only 5,472 tons of power batteries were recycled, accounting for just 7.4% of the total retired power batteries. Meanwhile, 106,300 tons of digital batteries were recycled, representing about 63.6% of their total scrapped volume. Compared to the overall lithium battery scrap market, the recycling rates still fall significantly below projected levels. At present, the volume of lithium batteries being recycled domestically remains substantially lower than the total number of batteries reaching the end of their lifecycle. This discrepancy can be attributed to several key factors: 1) China's lithium battery recycling infrastructure—including channels, systems, and regulatory frameworks—remains incomplete. As a result, most used batteries, especially digital ones, are often left uncollected or unrecovered. 2) While legal frameworks and regulations governing lithium battery recycling have begun to take shape, enforcement remains inconsistent, despite efforts to clarify responsibilities among stakeholders. 3) Some manufacturers choose not to recycle or reuse waste batteries due to concerns over trade secrets or because the economic benefits of doing so are not yet compelling enough. 4) Additionally, even batteries that have reached their theoretical end-of-life are sometimes kept in circulation by automakers due to cost considerations, rather than being scrapped. This practice artificially reduces the actual volume of retired batteries entering the recycling stream, further limiting the overall recycling capacity.

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