China’s Ministry of Industry and Information Technology (MIIT) has finalized sweeping new regulations for EV battery recycling that take effect in mid-2026, establishing mandatory collection targets, stricter traceability standards, and penalties for non-compliance that industry analysts say will reshape global supply chains for lithium, cobalt, and nickel. The rules represent the most comprehensive national framework for end-of-life battery management enacted by any country to date.
Under the new policy, automakers and battery manufacturers operating in China must recover 75% of EV batteries reaching end-of-life by 2028, rising to 90% by 2032. The regulations also mandate that every battery pack sold in the country carry a digital identity code linked to a centralized government database—a system that has been in pilot testing across Guangdong, Zhejiang, and Jiangsu provinces since early 2025.
What the Policy Requires
The MIIT framework consists of three core pillars. First, extended producer responsibility (EPR) obligations now apply to all companies manufacturing or importing EV batteries into China, requiring them to fund and operate collection networks. Second, a national traceability platform will track every battery from production through second-life applications to final recycling. Third, recyclers must meet minimum recovery rates of 95% for nickel, 95% for cobalt, and 85% for lithium—figures that exceed current EU Battery Regulation thresholds.
Companies that fail to meet these targets face fines of up to 5 million yuan ($690,000) per violation, along with potential suspension of operating licenses. The penalty structure marks a departure from China’s previously voluntary approach to battery recycling, which relied on a “whitelist” system of approved recyclers that carried no enforcement mechanism.
“China is sending an unmistakable signal that battery recycling is no longer optional infrastructure—it is foundational to the electric vehicle economy. Every major automaker with operations in China will need to rethink their end-of-life strategies.” — Dr. Wei Zhang, Director of Clean Energy Policy, Tsinghua University
Global Supply Chain Implications
The policy carries significant consequences beyond China’s borders. China currently accounts for over 70% of global lithium-ion battery cell production and processes the majority of the world’s refined lithium, cobalt, and nickel. By mandating domestic recycling at scale, Beijing is effectively building a parallel supply pipeline that reduces China’s dependence on imported raw materials while tightening the availability of recycled feedstock for international buyers.
Major Chinese recyclers—including GEM Co., Brunp Recycling (a CATL subsidiary), and Huayou Cobalt—have already announced capacity expansions totaling more than 600,000 tonnes per year of combined battery processing throughput, scheduled for completion between 2026 and 2028. These investments position China to recycle a substantial share of the estimated 1.2 million tonnes of EV batteries expected to reach end-of-life globally by 2030.
- CATL’s Brunp Recycling is constructing a new 200,000-tonne facility in Hunan province, set for commissioning in Q3 2026
- GEM Co. has signed offtake agreements with six European automakers for recycled cathode precursors
- Huayou Cobalt is building integrated recycling-to-precursor plants in both Indonesia and China
Competitive Pressure on Europe and North America
The timing of China’s announcement is notable. The European Union’s Battery Regulation, which entered into force in 2023, does not impose comparable recovery rate mandates until 2027, and the United States has yet to enact federal battery recycling legislation. Industry observers note that China’s earlier compliance deadlines and higher recovery thresholds could give Chinese recyclers a head start in producing battery-grade recycled materials at commercial scale.
For automakers operating across multiple jurisdictions, the new Chinese rules add complexity to an already fragmented regulatory landscape. Companies like Volkswagen, BMW, and Tesla—all of which have significant manufacturing presence in China—will need to establish or expand collection and recycling partnerships to meet the 2028 targets.
The policy also has implications for the growing second-life battery market. Batteries diverted to stationary energy storage or other applications will still count toward collection targets, but only if they remain within the traceability system. This requirement could accelerate the adoption of digital battery passports and standardized state-of-health testing protocols—developments that the broader industry has been moving toward but has not yet implemented at scale.
As the world’s largest EV market prepares to enforce these standards, the ripple effects will extend to raw material pricing, recycling technology investment, and international trade flows. Whether other nations respond with equivalent frameworks—or cede ground to China’s growing dominance in the battery circular economy—remains an open question heading into 2027.
