Against the backdrop of global low-carbon development, the new energy vehicle (NEV) industry continues to thrive due to its environmentally friendly characteristics, including reduced transportation emissions, sustainable vehicle materials, and decreased fossil fuel dependence. In 2023, China’s NEV production and sales reached 9.587 million and 9.495 million units respectively, growing by 35.8% and 37.9% year-on-year; China’s pure electric vehicles held 62% of the global market share. As the NEV fleet grows, shortcomings in China’s NEV recycling industry become increasingly apparent.
The main challenge in NEV recycling lies in power batteries, which typically have a lifespan of 5-8 years. Since 2018, China has entered a phase of large-scale battery retirement. According to 2023 data from NE Times, a Chinese NEV research institution, power battery installations in China’s NEV passenger vehicles reached 326.3GWh in 2023. The volume of retired power batteries is rising annually, with waste NEV batteries now classified as one of three major emerging solid waste categories.
During the 13th Five-Year Plan period (2016-2020), the Ministry of Industry and Information Technology issued several policy documents including “Industry Specification Conditions for Comprehensive Utilization of NEV Waste Power Batteries,” “Interim Provisions on Traceability Management of NEV Power Battery Recycling,” and “Guidelines for Construction and Operation of NEV Power Battery Recycling Service Networks” to strengthen industry management, standardize development, and promote resourceful, large-scale, high-value utilization of waste power batteries.
In the 14th Five-Year Plan period (2021-2025), the Chinese government has issued policies regarding power battery recycling, auto parts remanufacturing, and large-scale promotion of vehicle trade-in programs, establishing new policy requirements for NEV recycling.
Table 1: Overview of Recent NEV Recycling-Related Policies and Regulations in China
| Document Name | Release Date | Issuing Department |
|---|---|---|
| Industry Specification Conditions for Comprehensive Utilization of NEV Waste Power Batteries (2024 Edition) (Draft for Comments)[1] | August 14, 2024 | Department of Energy Conservation and Comprehensive Utilization, MIIT |
| Implementation Plan for Accelerating the Promotion of Industrial Resource Comprehensive Utilization[2] | January 27, 2022 | MIIT and eight other departments |
| Management Measures for Cascade Utilization of NEV Power Batteries[3] | August 19, 2021 | MIIT and five other departments |
| Pilot Implementation Plan for Extended Producer Responsibility of Automotive Products[4] | May 26, 2021 | MIIT and four other departments |
| Interim Measures for Standardized Management of Automotive Parts Remanufacturing[5] | April 14, 2021 | NDRC and eight other departments |
| NEV Industry Development Plan (2021-2035)[6] | October 20, 2020 | State Council Office |
| Industry Specification Conditions for Comprehensive Utilization of Waste Tires (2020 Edition)[7] | May 7, 2020 | MIIT |
| Interim Measures for the Administration of Industry Specification Announcements for Comprehensive Utilization of Waste Tires (2020 Edition)[8] | May 7, 2020 | MIIT |
Figure 1: Overview of Recent NEV Recycling-Related Policies in China
1. China’s NEV Power Battery Recycling Policy Requirements
The NEV Industry Development Plan (2021-2035), issued by the State Council Office in October 2020, sets forth the task of “promoting the development of the entire power battery value chain”. The Plan calls for encouraging enterprises to improve resource security for key materials like lithium, nickel, cobalt, and platinum. It establishes a standardized system for modular battery design, advances manufacturing equipment, and improves production efficiency. It also perfects the circular system for battery recycling, cascade utilization and resource recovery, encouraging shared recycling channels. The Plan establishes management systems for battery transport, storage, maintenance, safety inspection, retirement, and recycling, strengthening whole lifecycle supervision. Additionally, it explicitly calls for accelerating power battery recycling legislation.
In May 2021, MIIT and three other departments issued the Pilot Implementation Plan for Extended Producer Responsibility, encouraging automakers to collaborate on key technologies including detailed vehicle dismantling, rapid testing of used parts, remanufacturing of five major assemblies, power battery cascade utilization, and high-value recycling. The Plan requires automakers to strengthen key component traceability and fulfill their responsibility in power battery recycling traceability management.
In August 2021, MIIT and four other departments jointly issued Management Measures for Cascade Utilization of NEV Power Batteries. It encourages cooperation between cascade utilization enterprises and NEV manufacturers, battery producers, and vehicle recyclers to efficiently collect waste batteries for cascade use through existing channels. The Measures encourage power battery manufacturers to participate in waste battery recycling and cascade utilization. The Measures specify design requirements for cascade products considering electrical insulation, fire resistance, thermal management, and battery management systems. Owners of cascade products must transfer retired cascade products to recycling service points established by cascade utilization enterprises or regeneration enterprises for standardized processing.
In January 2022, MIIT and seven other departments jointly issued Implementation Plan for Accelerating Industrial Resource Utilization, emphasizing “improving the waste power battery recycling system”. It strengthens lifecycle traceability management, promotes industry chain cooperation for recycling channels, and advances safe cascade applications. It aims to build demonstration projects in key regions and cultivate backbone enterprises.
In August 2024, MIIT sought public comments on Industry Specification Conditions for Comprehensive Utilization of NEV Waste Power Batteries (2024 Edition). The draft proposes requirements for enterprise layout, facility conditions, equipment, technology, traceability, resource utilization, energy consumption, product quality, and environmental protection. It requires recycling enterprises to develop technologies for cathode/anode materials, separators, and electrolytes recycling.
Figure 2: Recent Policy Requirements for Power Battery Recycling in China
2. Other Recycling Policy Requirements for New Energy Vehicles
After years of development, China’s waste tire comprehensive utilization industry has formed four major business segments: tire retreading, reclaimed rubber production, rubber powder production, and tire/rubber pyrolysis, creating a unique waste tire utilization industry chain. In 2020, the Ministry of Industry and Information Technology revised and issued the “Industry Specification Conditions for Comprehensive Utilization of Waste Tires (2020 Edition)” and “Interim Measures for the Management of Industry Specification Announcements for Comprehensive Utilization of Waste Tires (2020 Edition)“. The policy documents establish specification conditions as guidance documents, strengthen requirements for enterprise and product green sustainable development, and establish dynamic management mechanisms emphasizing supervision during and after events.
In April 2021, eight departments including the National Development and Reform Commission and the Ministry of Industry and Information Technology jointly issued the “Interim Measures for Standardized Management of Auto Parts Remanufacturing.” This policy regulates the development of remanufacturing industries for ‘five major assemblies’ including automobile engines, steering systems, transmissions, front and rear axles, and frames, extending the auto parts industry chain and promoting quality upgrades. The Measures clearly specify requirements for remanufacturing enterprise conditions, used parts management, remanufacturing production management, product management, market management, and supervision. They specifically require remanufactured products to strictly match original new products, standardize production behavior, and encourage deep integration between insurance and remanufacturing industries. They also encourage end-of-life vehicle recycling enterprises, insurance companies, and auto repair businesses to prioritize cooperation with certified remanufacturing enterprises and use their products. Government agencies and other public institutions are encouraged to prioritize using remanufactured products.
3. Large-Scale Trade-in Programs Present New Challenges for New Energy Vehicles
In July 2024, the National Development and Reform Commission and Ministry of Finance issued “Measures on Strengthening Support for Large-Scale Equipment Renewal and Consumer Goods Trade-ins,” requiring regions to focus on supporting vehicle scrapping updates and personal consumer passenger car replacements, increasing vehicle scrapping update subsidy standards. Based on the “Implementation Rules for Auto Trade-in Subsidies” (No. 75), individual consumers who scrap China III or lower emission standard fuel passenger vehicles or new energy passenger vehicles registered before April 30, 2018 (inclusive), and purchase new energy passenger vehicles listed in the “Catalog of New Energy Vehicle Models Exempt from Vehicle Purchase Tax” can receive a 20,000 yuan subsidy.
With China promoting large-scale automobile trade-ins, both ownership and scrapping of new energy vehicles will accelerate, bringing new challenges to the recycling industry. Meanwhile, three departments including the National Development and Reform Commission jointly issued the “Action Plan for Further Strengthening the Carbon Peak and Carbon Neutrality Standard Measurement System (2024-2025)” (July 2024). The Plan proposes to strengthen the development of standards for key product and equipment recycling, develop standards for recycling and dismantling bulk commodities such as automobiles and home appliances, and carry out research on standards for photovoltaic, wind power, and power battery recycling and utilization.
4. Future Development Trends
In March 2024, seven departments including the State Administration for Market Regulation and the National Development and Reform Commission jointly issued the “Action Plan for Promoting Equipment Renewal and Consumer Goods Trade-ins Through Standards.” The Plan proposes to “accelerate and improve standards for recycling, sorting, dismantling, and recycling of household appliances, car tires, textiles and clothing, furniture, and agricultural machinery,” “improve standards for new energy vehicle battery recycling and utilization,” “formulate and revise quality standards for recycled materials such as recycled metals and plastics, comprehensively promote the construction of whole-chain standard systems for recycled plastics, and promote the establishment of recycled plastics certification systems. Explore adding requirements for using recycled plastics and metals in standards for home appliances, automobiles, and electronic products to help form closed material use loops” and other requirements related to new energy vehicle recycling. In September 2024, seven departments including the Ministry of Commerce issued a notice to strengthen supervision and management of end-of-life vehicle recycling. The work will be orderly promoted in four aspects: strengthening qualification certification management for end-of-life vehicle recycling, guiding quality upgrades of recycling enterprises, conducting special rectification actions against illegal recycling and dismantling, and strengthening organizational implementation.
From recent Chinese policy documents, it’s clear that current challenges in new energy vehicle recycling include limited recycling channels for owners, poor effectiveness of power battery recycling policies, difficulty controlling informal recycling channels, backward recycling technology, and lack of mature industry standards.
The Chinese government will continue implementing published policies, approaching from all links in the power battery value chain, connecting upstream and downstream of power batteries, promoting cooperation between front-line manufacturers and battery producers and third-party recyclers, opening up waste power battery recycling channels, improving waste power battery recycling systems, and achieving cascaded utilization of new energy vehicle power batteries. Meanwhile, corresponding standards will be issued to improve the policy system for new energy vehicle battery recycling and utilization.
Furthermore, as the country with the highest global market share of pure electric vehicles, China will continue encouraging all parties to conduct technical research to improve the recyclability of new energy vehicle power batteries and the remanufacturing level of waste batteries.
[1] https://www.miit.gov.cn/gzcy/yjzj/art/2024/art_795291cc4e4d4f0a852c0646a7e1a075.html
[2] https://www.gov.cn/zhengce/zhengceku/2022-02/11/content_5673067.htm
[3] https://www.gov.cn/zhengce/zhengceku/2021-08/28/content_5633897.htm
[4] https://www.gov.cn/zhengce/zhengceku/2021-06/10/content_5616601.htm
[5] https://www.gov.cn/zhengce/zhengceku/2021-04/25/content_5601957.htm
[6] https://www.gov.cn/zhengce/content/2020-11/02/content_5556716.htm
[7] https://www.gov.cn/zhengce/zhengceku/2020-05/26/content_5515109.htm
[8] https://www.gov.cn/zhengce/zhengceku/2020-05/26/content_5515109.htm
