Techno-economic assessment of battery recycling and cascade use for legal and illegal recyclers in China

With the rapid popularization of electric vehicles (EVs), the battery recycling industry is undergoing rapid growth. While the Chinese government has implemented a white-list mechanism under which only approved recyclers are allowed to process retired batteries, the presence of small-scale illegal battery recycling vendors has posed challenges to this mechanism. This study compares the techno-economic performance of battery recycling between legal and illegal recyclers in China, and discusses strategies to eliminate illegal operations. Our research covers two battery chemistries: lithium nickel-manganese-cobalt oxide (NMC) and lithium iron phosphate (LFP), as well as two technological pathways: resource recycling and cascade utilization. Under the base case, the costs of illegal vendors are 35-46% lower than that of legal companies. Although legal companies achieve high resource utilization, their overall economic performance lags behind due to their high costs associated with equipment, environmental protection, taxes, and materials. Such situation can be reversed with changes in economies of scale, tax incentives, and automation in the recycling process. Among different battery types and recycling pathways, the resource recycling of NMC811 batteries is most likely to achieve a competitive advantage through policy support and economies of scale. In contrast, for the resource recycling of LFP batteries, legal companies are unlikely to surpass illegal vendors across all scenarios. To ensure sustainable development of the battery recycling industry, these strategies should be comprehensively employed, alongside measures such as increasing entry barriers, regulating recycling networks, and strengthening supervision to crack down on illegal vendors.