China generated 400,000 tonnes of spent EV batteries in 2025.

The forecast says 1 million tonnes by 2030.

But who's actually recycling them?

Not the companies you'd expect.

Brunp, GEM, Hayou Cobalt dominate headlines.

They process batteries on an industrial scale.

They follow environmental standards and report to regulators.

Reality looks different.

Underground recyclers handle most of China's battery waste.

Small workshops operating without permits.

No environmental controls. No traceability.

"This creates distortions in the market where legitimate players, who invest in proper detection, hazardous waste treatment, and compliance, struggle to compete purely on price." a spokesperson at CATL.

China imports 90% of cobalt. 60% of lithium in 2024. Nickel and manganese dependency remain high.

"If resources cannot be recycled, then we will keep facing strangleholds in the future." Hu Song from China Automotive Technology Research Centre.

Beijing sees the gap.

New recycling policies roll out in 2026.

They target the informal sector directly.

They want to regulate second-life battery applications.

The goal is to create tracking systems for battery waste streams.

The first wave of Chinese EVs from 2015-2020 is coming now.

The volume overwhelms existing formal capacity.

The informal sector fills the gap but also creates the problem.

China faces a choice.

• Formalize recovery or lose control of critical minerals.

• Enforce standards or accept environmental damage.

• Build traceable supply chains or watch materials disappear into grey markets.

Beijing chose formalization.

New regulations starting in April 2026 mandate a digital identity for every battery.

Producer responsibility becomes enforceable with fines exceeding RMB 1 million

Resource security depends on recovery infrastructure.

But capacity means nothing without control.