Because retired batteries retain economic value, they seldom go directly to landfills. In principle, batteries that remain in good condition can be repurposed for less demanding uses, while others can be recycled into raw materials for new batteries.

Repurposing, however, requires recyclers to test and grade batteries, modules, and sometimes individual cells. It is a technically complex and expensive process. A Tesla Model Y battery pack, for example, can contain more than 4,000 individual cells.

Unlicensed operators can skip much of that testing and dismantle packs at far lower cost. Some then sell used cells for unapproved applications, including aftermarket range-extending battery packs. Because the cells may not have been properly tested, those modifications can create substantial fire and safety risks.

In November, a Xiaomi SU7 electric sedan caught fire in Changzhou, Jiangsu Province. The owner later told the Sanxiang Metropolis Daily that the battery involved was an aftermarket range extender rather than the vehicle’s original factory-installed battery.

Recycling batteries into raw materials appears to offer a more commercially promising path.

Companies can process batteries into “black mass,” a powder containing lithium, cobalt, nickel, manganese, graphite, and other materials. Those materials can then be separated, refined, and reused in new batteries. Some advanced processes can recover more than 95 percent of certain critical battery materials.

Unlicensed recyclers, lacking in technology and infrastructure, are unlikely to achieve such high recovery rates. Their lower costs can come not only at the expense of the environment, but also at the expense of workers who risk exposure to toxic materials.

“It is about health, about human rights, about pollution in the air, water, and soil,” Sun said. “It is an enormous problem.”

Sun’s research estimated that uncertified recyclers handled nearly 270,000 metric tons of retired batteries in 2023. Without decisive intervention, the study projected, the volume flowing through informal channels could reach 1.26 million tons in 2030 and 16.79 million tons by 2040.

China could significantly improve those outcomes by requiring automakers to take greater responsibility for battery recycling, imposing stricter controls on informal recyclers, and offering incentives to consumers and certified recyclers.

Under such a scenario, certified companies could handle 60 percent of retired EV batteries by 2030 and 92 percent by 2060, the study concluded.

A new national regulation governing EV battery recycling took effect on April 1. China is adopting a similar approach to Europe’s “battery passport” system, requiring automakers to bear greater responsibility for collecting and recycling used batteries. Batteries removed from retired vehicles must be directed through approved channels and processed by certified companies.

But more needs to be done, said Sun. The government’s efforts alone would not solve the problem.

“Automakers have to take responsibility, even if it pushes up costs,” he said.

“Car owners must be aware of their responsibility too. They have to be willing to sacrifice a small amount of money rather than sell batteries to the informal recyclers.”

The challenge is not unique to China. Battery recycling has proven difficult to make profitable worldwide.