Lithium-ion battery recycling relieves the threat to material scarcity amid China's electric vehicle ambitions

The study addresses how lithium-ion battery (LIB) recycling can support China’s electric vehicle (EV) deployment under its carbon neutrality (CN60) target amid scarcity of critical materials (cobalt, lithium, nickel, manganese). Circular economy strategies, including recycling, can reduce environmental impacts and improve resource security. China has implemented extended producer responsibility mandates to build a waste LIB recycling system. Rapid EV growth is projected to exceed 10 million vehicles and over 70% market penetration with significant emissions reduction potential by 2050. However, EV battery manufacturing concentrates demand for critical materials (in 2022, EV batteries accounted for ~60% of lithium, 30% of cobalt, and 10% of nickel demand), and China relies heavily (>80%) on imports for nickel, lithium, and cobalt. The paper poses two main questions: to what extent can LIB recycling assist China’s EV deployment ambitions under CN60, and what are the implications in environmental performance, spatial configuration, and economic feasibility? It also highlights practical challenges, including low collection rates due to unclear responsibilities and informal market leakage, and uncertainty arising from shifts in battery chemistries (e.g., growing LFP versus NMC/NCA).

The paper situates its contribution within circular economy and EV battery recycling literature, noting that recycling mitigates environmental impacts and can alleviate supply-side scarcity of critical materials to varying degrees. Prior works have examined extended producer responsibility, material flow analyses, and the potential of second-life and vehicle-to-grid strategies. Studies have also highlighted bottlenecks in critical mineral supply chains, vulnerabilities due to cathode chemistry choices, and the importance of integrating circular strategies with low-carbon pathways. The authors build on established frameworks in dynamic material flow analysis (dMFA), life-cycle assessment (LCA), and techno-economic modeling of recycling processes, addressing gaps related to long-term, scenario-based assessments that jointly consider resource sufficiency, environmental performance, geospatial logistics, and cost feasibility under evolving energy mixes and battery technologies.

The authors develop a dynamic, integrated assessment framework combining: (1) EV adoption forecasting under China’s CN60 target using GCAM for macro pathways (SSP1 with net-zero by 2060) coupled to bottom-up models (Bass model for passenger cars; stock-driven dMFA for trucks) to generate long-term EV uptake trajectories; (2) LIB scrappage dynamics using Weibull lifetime distributions and a roadmap incorporating early failures, echelon use (direct reuse in low-speed EVs at SOH >85% and indirect reuse in ESS at SOH 80–85%), and eventual recycling when SOH <80%, with assumed shares of reuse/recycling; (3) a nested dMFA for critical materials (Co, Li, Ni, Mn) linking vehicle stock to LIB stock and material flows, quantifying prospective demand and secondary supply under multiple scenarios; (4) a dynamic LCA of LIB manufacturing, collection, transport, and recycling, with electricity carbon intensity updated every 5 years based on GCAM CN60 electricity mix to avoid static-LCA bias, and process inventories from SimaPro 9 with ecoinvent 3.8 and GREET 2023 for transport/collection; (5) geospatial optimization via ArcGIS Location-Allocation to minimize logistics distances and costs, using EV manufacturers’ sales networks as proxies for collection points and authorized recyclers/second-life facilities as candidate sites, re-optimized by decade from 2020 to 2060; (6) process-based techno-economic analysis with EverBatt 2023, decomposing costs into logistics/collection, disassembly, and recycling processes, incorporating materials/energy, labor, capital, overhead, R&D, and economies of scale, and integrating location-optimized logistics to reflect spatially minimized transport costs. Scenario design explores variability in: cathode chemistries (business-as-usual mix; LFP-dominated; NMC-dominated; NCA-dominated), recycling processes (pyrometallurgical, hydrometallurgical, and direct cathode recycling), LIB service life (low/high), critical material recycling rates (progressive vs baseline), and collection rates (65%, 85%, 100%). Outputs include vehicle- and cathode-specific material self-sufficiency potential (SP), cumulative CO2 emissions and avoided emissions, optimal facility locations, unit and industry-level costs/profits.

• Historical and projected material flows: By 2020, recycled sources covered only ~1.3% of Co, Ni, Mn demand and 1.1% of Li demand. EV adoption under CN60 grows rapidly to ~34 million by 2030, then stabilizes toward 2060, generating ~46 Mt of waste batteries by 2060 (≈38% from compact cars, ≈60% from large cars/SUVs). LFP-equipped retired batteries approach about half by 2060. In 2060, ~43% of waste batteries are directly recycled and 58% undergo cascade use; among cascaded, ~44% go to ESS and ~35% eventually get recycled. - Demand-supply imbalance: Cumulative closed-loop self-sufficiency gaps (demand minus recycling supply) to 2060 reach ~4638 kt Co, 5226 kt Li, 4434 kt Mn, and 13665 kt Ni. By 2060, cobalt and manganese gaps are ~54-fold and ~116-fold their 2022 production capacities, respectively. China’s cobalt shortage in 2060 is projected at ~120 kt, implying ~60 new average-sized mines would be needed absent recycling expansions. - Scenario effects on material self-sufficiency: Cathode choices strongly affect demand. In 2060 cobalt demand is ~164 kt in the reference scenario (RS), ~132 kt in an NMC-dominant scenario (CC-NMC), ~35 kt in an LFP-dominant scenario (CC-LFP), and peaks near ~184 kt in an NCA-dominant scenario (CC-NCA). Closed-loop recycling can reach 87–134% SP for cobalt under CC-NCA. Direct cathode recycling (RP-DIR) achieves ~80–123% SP for Co, Ni, Mn and ~67–104% for Li by 2060; pyrometallurgical recycling (RP-PYR) yields the lowest recovery, especially for Li and Mn. Under the optimal technology scenario (OPT) with best-case collection, critical materials approach balance by 2060. Required collection rates to balance 2060 demand are ~84% for Co, Ni, Mn and ~90% for Li. BEVs contribute >85% of recycled material, with large cars/SUVs ~59%. Cumulatively by 2060, secondary supply meets ~47–65% of cumulative demand in most cases. - Environmental performance: Battery manufacturing (notably cathodes) contributes ~42–56% of LIB life-cycle CO2 emissions under the CN60 grid. Collection and transport have negligible impacts (−1–3%). Transitioning to direct cathode recycling (RP-DIR) can cumulatively mitigate ~1671 Mt CO2-eq by 2060, about ninefold greater mitigation than hydrometallurgical recycling in RS. Under OPT, recycling avoids 1550 Mt CO2-eq by 2060 with the CN60 electricity mix, roughly twice China passenger car sector’s annual emissions. LFP use can increase recycling-stage emissions (up to +137 Mt cumulative), but advanced direct cathode recycling can instead avoid substantial emissions (−430 Mt). - Economic feasibility and geospatial optimization: Optimized spatial layouts suggest large hubs and cascading-use facilities in battery-rich regions (e.g., Guangdong, Henan, Chongqing) and connector regions (e.g., Jilin, Guizhou, Shanxi). Optimized collection/transport costs remain stable at ~$0.98–$1.05 per kg from 2030–2060 across chemistries. Economies of scale improve unit economics over time. Under RS hydromet, LFP recycling remains uneconomic (loss narrowing from ~$2.05/kg in 2030 to ~$2.00/kg in 2060), whereas NCA and NMC chemistries yield profits (e.g., NCA ~$0.74→$0.89/kg; NMCIII $1.67→$1.81/kg). Under OPT with direct cathode recycling, even LFP becomes profitable ($1.30→$1.32/kg), and higher-value chemistries achieve $4.01–$4.37/kg by 2060 depending on NMC variant, and $4.10–$4.18/kg for NCA. At industry scale, CC-LFP yields the largest loss ($3 billion by 2060), while OPT achieves the highest profit ($58 billion net) due to superior recovery and advanced infrastructure. Overall, recycling is economically feasible in most scenarios, with technology choice and recovery rates being decisive.

The findings show that without aggressive, well-designed recycling strategies, critical material shortages will severely constrain China’s EV deployment under CN60. Closed-loop LIB recycling, especially with direct cathode recycling, can substantially mitigate supply risks (approaching or exceeding self-sufficiency for Co, Ni, Mn and improving Li supply), reduce life-cycle emissions on a dynamic decarbonizing grid, and deliver positive economic returns when paired with high collection rates and optimized facility networks. The required collection rates (≥84% for Co, Ni, Mn and 90% for Li by 2060) underscore the importance of improving formal collection systems through regulation and market mechanisms to curb leakage to informal channels. Cathode chemistry evolution introduces trade-offs: LFP can alleviate dependence on Co/Ni/Mn but may increase recycling-stage emissions and does not address lithium scarcity; NMC/NCA enhance circularity potential and environmental gains when coupled with advanced recycling. Spatial design of the recycling network and economies of scale are critical levers to reduce logistics costs and enhance profitability and resilience. Overall, integrating technology advancement (direct cathode recycling), high recovery targets, and geospatial optimization forms the optimal strategy to support EV diffusion and decarbonization while strengthening material security.

This work contributes a unified, scenario-based framework that integrates EV adoption trajectories, LIB scrappage dynamics, critical material flows, dynamic LCA, geospatial optimization, and techno-economic analysis to identify optimal LIB recycling strategies under China’s CN60 target. The study reveals severe impending material gaps, quantifies the collection rates needed to balance supply, demonstrates the environmental co-benefits of advanced recycling (up to ~1550 Mt CO2-eq avoided under OPT), and shows that direct cathode recycling combined with optimized logistics can yield substantial economic gains (industry net profit ~$58 billion). Policy and industry should prioritize: scaling direct cathode recycling toward commercialization, raising and enforcing collection rates via extended producer responsibility and clear pricing mechanisms, strategically siting facilities to balance economies of scale and logistics efficiency, and aligning cathode chemistry roadmaps with circularity and emission goals. Future research should extend the framework to globalized supply chains and evaluate emerging chemistries (e.g., sodium-ion, lithium-sulfur/air) and their implications for material sufficiency, environmental impacts, and recycling system design.

The analysis focuses on China’s domestic market and does not model international trade of EVs, LIBs, or critical materials, which could affect supply-demand balances. Results depend on assumptions about future battery technologies and market shares, introducing uncertainty as chemistries evolve (e.g., potential adoption of lithium-air or lithium-sulfur). While the LCA incorporates dynamic electricity mixes, other long-term technological and process changes may also influence emissions and costs. Scenario-based assumptions for collection rates, recovery efficiencies, and reuse shares may differ from future real-world practices, and informal recycling leakage remains challenging to quantify.