Worldwide recycling capacity for electric vehicle batteries remains underused as an anticipated switch to EVs has been slower than expected and the supply chain becomes concentrated in China.
Recycling capacity for lithium-ion batteries totaled 4.2 million metric tons in 2025, according to data from US-based Mobility Global, but only 670,000 tons of such batteries were discarded.
The overcapacity is expected to continue through 2030, projected to be around four times the discarded amount.
Lithium-ion batteries for electric vehicles contain large amounts of such critical metals as cobalt and nickel. Recycling can return those materials to the economy and ease dependence on imports.
China is responsible for over 80% of global EV battery production and controls roughly 80% of recycling capacity.
Battery supplier Contemporary Amperex Technology (CATL) and automakers are involved in battery recycling, using earnings from their main businesses to add processing capacity. The government has supported investment through subsidies for factory construction.
The US and Europe have also promoted research and development on battery recycling, looking to cut reliance on imports of critical metals. Yet EV demand has fallen short of projections, and recycling usage rates are low.
In the US, the Trump administration’s cutbacks to support for the EV transition have dealt a blow to plans for new battery factories. Construction has been canceled or stalled for about ten US battery plants as of the end of fiscal 2025, as reported by the Federal Reserve Bank of Dallas.
US battery recycling startup Ascend Elements filed for Chapter 11 bankruptcy protection in April after the profitability outlook for a plant being built in the state of Kentucky worsened and government subsidies were cut. Canadian recycler Li-Cycle filed for bankruptcy protection in 2025.
Plant construction is being delayed or halted in Japan and Europe as well.
Japan’s JX Advanced Metals has developed technology to efficiently recover lithium from EV batteries, yet it plans to push back its 2030 commercialization target. German chemical group BASF has suspended construction of recycling facilities planned in Spain and Canada.
Incentives for investment in battery recycling are expected to worsen due to the growing use of lithium iron phosphate (LFP) batteries. These do not require cobalt, so there is less valuable metal to recover.
LFP batteries accounted for over 55% of all EV batteries last year, a five percentage point increase from 2024, the International Energy Agency said.
While China has shifted to LFP batteries for domestic EVs, it is working to collect discarded batteries from other countries.
In August 2025, the country lifted a ban on imports of black mass, a scrap material made from crushed batteries, to raise recycling plant usage.
As competition among Chinese companies to obtain critical metals spreads worldwide, supplies in other markets is shrinking, said Chi Hin Ling, Asia editor for metals and scrap at commodities tracker Argus Media.
Around 80% of Japan’s used EVs are eventually exported, so securing batteries to recycle remains a challenge. Sumitomo Metal Mining, which completed the country’s first EV battery recycling plant in September, imports black mass from Europe, the US and other sources. The company is also working with trading house Sumitomo Corporation to import black mass recovered in Australia and elsewhere.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.