Recycling of Used Lithium-ion Batteries Market - Global Forecast 2026-2032

The Recycling of Used Lithium-ion Batteries Market size was estimated at USD 3.92 billion in 2025 and expected to reach USD 4.64 billion in 2026, at a CAGR of 19.57% to reach USD 13.72 billion by 2032.

With the electric mobility revolution gaining unprecedented momentum, the volume of lithium-ion batteries reaching end-of-life stages is set to increase exponentially. The global transition to electric vehicles, grid-scale storage, and portable electronics has accelerated demand for fresh battery capacity while simultaneously creating a growing stream of spent cells requiring sustainable disposal. As automotive OEMs, utilities, and consumer electronics manufacturers navigate supply chain vulnerabilities and rising raw-material costs, the ability to recover critical metals from used batteries has emerged as a strategic imperative rather than an environmental afterthought.

Against this backdrop, regulatory bodies worldwide are tightening recycling and recovery requirements. In the European Union, new measurement rules for recycling efficiency and recovery of strategic raw materials like cobalt, copper, lithium, and nickel will enter into force on July 24, 2025, establishing a harmonized performance framework for recyclers at a minimum recycling efficiency of 65% for lithium-based batteries by December 31, 2025. Such policy developments underscore the urgency for industry participants to refine processes, secure compliant feedstock channels, and demonstrate high-quality secondary material outputs.

Driven by environmental regulations and corporate commitments to circular economy principles, stakeholders across the value chain-from cell producers to raw-material refiners-are intensifying collaborative efforts. This report’s introduction sets the stage for a detailed exploration of the technological innovations, evolving policy frameworks, and market forces redefining the lithium-ion battery recycling landscape.

Over the past decade, lithium-ion battery recycling has undergone a radical transformation driven by technological breakthroughs and shifting policy priorities. Direct recycling methods, which regenerate cathode materials without complete breakdown, are increasingly complemented by advanced hydrometallurgical processes that leverage both acid and alkaline leaching to recover lithium, cobalt, and nickel with high purity. At the same time, mechanical crushing and shredding techniques have become more precise, enabling higher throughput at lower energy consumption. Parallel advances in pyrometallurgy, including refined smelting and high-efficiency refining, are delivering robust metal recovery rates while addressing environmental compliance challenges.

Policy frameworks are keeping pace with these technical shifts, reinforcing incentives for higher recovery rates and sustainable practices. The EU’s Batteries Regulation mandates that, by December 2027, lithium recovery from waste batteries must reach 50% and climb to 80% by 2031, alongside recovery targets exceeding 90% for cobalt, copper, lead, and nickel. Meanwhile, in North America, incentives under the U.S. Inflation Reduction Act continue to incentivize domestic recycling capacity, and emerging state-level programs are offering additional support for infrastructure deployment and technology adoption.

These converging trends are driving significant capital flows into recycling ventures, strategic partnerships among OEMs, recyclers, and materials companies, and a wave of pilot projects demonstrating closed-loop manufacturing cycles. As a result, recycling is no longer confined to end-of-life management but is increasingly integrated into electric-vehicle and energy-storage supply chains as a source of reliable, high-value secondary materials.

In April 2025, the U.S. government implemented an 82.4% tariff on Chinese-origin lithium-ion battery imports, combining a 34% blanket penalty with an additional 25% Section 301 duty and layered reciprocal duties, fundamentally reshaping transpacific battery economics. This move, aimed at promoting domestic manufacturing and reducing reliance on foreign supply chains, has transformed cost structures for end-of-life battery importers and recyclers alike. Equipment, chemicals, and intermediate products that circulate across international boundaries now face a significant cost barrier, prompting many market participants to reconsider sourcing strategies and regionalize operations to maintain profitability.

Major battery producers have already signaled market repercussions. In July 2025, LG Energy Solution warned that the combined impact of new U.S. tariffs and the impending expiration of federal EV purchase subsidies on September 30 could slow EV battery demand in North America and raise vehicle prices, potentially delaying consumer uptake and compressing supply of spent batteries destined for recycling. The expectation of slower volumes makes strategic planning for both new recycling capacity and existing plant utilization critical, as overcapacity in an environment of constrained feedstock inflows could erode margins further.

Simultaneously, policy instruments such as the Section 232 Executive Order signed on April 15 2025 have initiated formal investigations into critical minerals and derivative products to assess vulnerabilities and bolster domestic supply chains. While many critical battery-grade minerals remain exempt from reciprocal tariffs, uncertainty persists regarding the potential imposition of duties on derivative products. In response, recyclers and OEMs are exploring localization of upstream processes and vertical integration strategies to hedge against tariff volatility and ensure continuity of supply for the next generation of battery production cycles.

The lithium-ion battery recycling market can be deconstructed through multiple lenses, each revealing unique competitive, technological, and strategic imperatives. When examining recycling processes, the ecosystem spans direct regeneration approaches, hydrometallurgical acid- and alkaline-leaching modalities, mechanical crushing and shredding operations, and high-temperature pyrometallurgical refining and smelting, with further differentiation between automated and manual disassembly streams. Consideration of battery chemistries underscores the varied recovery challenges posed by LCO, LFP, LMO, NCA, and NMC formulations, as each composition influences feedstock valuation and chemical process design. End-use applications introduce further complexity, as material specifications for automotive cells, consumer electronics, stationary energy storage, and industrial batteries diverge in purity and granularity requirements. Meanwhile, cylindrical, pouch, and prismatic form factors demand tailored pre-processing workflows to optimize sorting and throughput. Material output categories-from black mass to cathode powders, metal salts, and refined metals-serve distinct value-chain functions, and recyclers often specialize to capitalize on margin differentials. Finally, collection channels-including OEM take-back programs, retail drop-off points, scrap dealers, third-party collectors, and vehicle scrappage facilities-shape feedstock quality, volume predictability, and logistical efficiencies.

Across the Americas, recycling infrastructure development has been propelled by federal incentives, state mandates, and growing corporate commitments to circular sourcing. The United States has witnessed substantial investment in large-scale facilities, bolstered by Department of Energy loans and private capital, while Canada’s strategic mineral policy continues to incentivize feedstock aggregation and processing capacity. These regional dynamics have fostered a North American network of processing hubs and spoke-style pre-processing sites that can mitigate the impact of cross-border tariffs and streamline domestic material flows.

In Europe, ambitious regulatory frameworks are driving harmonized collection and recycling targets. Under the EU’s Batteries Regulation, member states must meet a minimum lithium recovery rate of 50% by the end of 2027, climbing to 80% by 2031, with corresponding cobalt, copper, lead, and nickel recovery mandates set at 90% by 2027 and 95% by 2031. The region is characterized by close integration between automotive OEMs and recycling specialists, with extended producer responsibility driving economies of scale in collection networks and the rollout of digital battery passports enhancing traceability across supply chains.

Asia-Pacific markets exhibit divergent trajectories. China, the world’s largest battery producer, is scheduling its first national black mass standards for July 2025, setting uniform quality thresholds for nickel, cobalt, lithium, and manganese content, along with stringent emissions and traceability requirements that aim to formalize black mass imports from global sources and expand domestic processing capacity. South Korea and Japan continue to refine incentive schemes and joint ventures between automakers and recyclers, while emerging markets in Southeast Asia are establishing pilot recycling projects to capture growing volumes of portable electronics waste.

Li-Cycle has been at the forefront of North American recycling infrastructure, securing a $475 million DOE loan approval in November 2024 to underwrite its Rochester, New York facility, although the company has encountered funding challenges that prompted a strategic review of its asset base in early 2025. Supported by Glencore’s convertible note holdings, Li-Cycle’s Spoke and Hub model remains a demonstration of closed-loop ambition, yet financing remains essential to realize its full processing and refining capacity ambitions.

Redwood Materials, founded by a former Tesla CTO, exemplifies rapid private-market growth. Having raised over $2 billion in financing to date, the company is expanding its footprint beyond its Nevada hub with a new R&D center in San Francisco and a planned factory in South Carolina focused on anode copper foil production, underscoring its strategy to integrate recycling, refining, and component manufacturing. Redwood’s partnerships with major OEMs and utilities-coupled with its move into energy-storage systems through its Redwood Energy business-reflect a diversified approach to capturing value across the battery lifecycle.

Umicore, a European materials technology group, continues to leverage its global smelting and refining network to process black mass and precursor materials, benefiting from early investments in hydrometallurgical facilities and long-standing offtake agreements with automotive OEMs. Similarly, American Battery Technology Company is advancing proprietary ion-exchange and solvent extraction processes in Nevada to recover battery-grade lithium and critical metals, supported by state incentives and strategic collaborations with energy-storage developers. These participants, among others, illustrate the competitive interplay between innovation, scale, and integration across the industry.

To secure competitive advantage, stakeholders should prioritize strategic partnerships that align OEM demand with recycler capacity, enabling long-term feedstock commitments and co-investment in advanced processing technologies. Investing in modular, scalable process architectures will allow organizations to adapt rapidly to changes in feedstock chemistry and regulatory requirements, while minimizing capital risk. Policymakers should be engaged through industry consortia to advocate for stable incentive frameworks, clear tariff policies, and harmonized international standards to reduce uncertainty along global value chains.

Operational excellence can be further enhanced by deploying digital traceability systems-such as QR-code-enabled black mass tracking and blockchain-backed provenance ledgers-that improve material certification and foster confidence among downstream cell producers. Concurrently, R&D leaders must intensify focus on direct regeneration methods, solventless leaching processes, and novel separation technologies to drive recovery yields and reduce environmental footprints. Finally, companies should cultivate talent pipelines in materials science, process engineering, and data analytics to maintain the workforce agility needed for continuous innovation and compliance with evolving environmental and safety standards.

This report synthesizes insights from a multi-phase research methodology encompassing primary interviews with C-suite executives, process engineers, and policy experts, alongside rigorous secondary analysis of public filings, regulatory documents, and industry publications. Quantitative process benchmarking was conducted using proprietary data points from confirmed pilot and commercial facilities, enabling comparative evaluations of recovery efficiencies, throughput costs, and environmental performance metrics.

Regulatory analysis involved detailed review of key legislative instruments-including the EU Batteries Regulation, U.S. Section 232 tariffs, and China’s national standards for black mass-to map compliance timelines and ascertain risk variables related to trade policy. Scenario planning workshops with cross-functional stakeholders validated strategic recommendations, while expert panels from leading academic institutions provided peer review of technical assumptions and worst-case contingency assessments. All data and qualitative inputs were triangulated through iterative validation cycles to ensure robust, actionable findings.

The convergence of technological innovation, policy evolution, and shifting market dynamics has positioned lithium-ion battery recycling as a linchpin of the global clean energy transition. While recent tariffs and tariff uncertainties have injected complexity into cross-border material flows, they have also catalyzed the localization of processing capabilities and intensified stakeholder collaboration. Breakthroughs in direct regeneration, hydrometallurgical refinement, and digital traceability are unlocking pathways to higher recovery yields and lower environmental impacts, enabling the creation of reliable secondary material streams for next-generation battery cells.

However, this sector remains in a state of dynamic flux. Success will depend on the agility of recyclers to pivot processes, secure diversified feedstock sources, and navigate an intricate web of regional regulations and incentive programs. As the volume of end-of-life batteries surges, the ability to transform waste into opportunity will determine who leads in defining the sustainable supply chains of tomorrow. The imperative is clear: those who strategically integrate technology, policy advocacy, and operational excellence will capture the value inherent in the circular battery economy.

To explore the full depth of our findings, methodologies, and strategic analyses, we invite you to connect directly with Ketan Rohom, Associate Director, Sales & Marketing at 360iResearch. Ketan can guide you through a tailored overview of the report’s core insights and help you align its actionable intelligence with your organization’s strategic objectives. Reach out to secure your copy of the comprehensive market research report on used lithium-ion battery recycling and empower your decision-making with data-driven clarity and confidence today