Electric vehicles (EVs) remained the primary source of global battery deployment, accounting for more than 70% of the total in 2025, slightly down from almost 80% in 2024. In 2025, EV battery deployment reached 1.2 TWh, an increase of almost 30% compared to 2024, and more than 7 times greater than in 2020. Light‑duty vehicles remained the dominant segment, representing more than 85% of the 2025 EV battery deployment. However, the fastest growth came from electric trucks, for which battery demand more than doubled – largely thanks to a sharp acceleration in sales in the People’s Republic of China (hereafter, “China”) (see One in four trucks sold in China in 2025 was electric). As a result, electric trucks accounted for about 8% of global EV battery deployment in 2025, up from less than 5% in 2024.

Regionally, EV battery deployment1 expanded in China (60% of global) and the European Union (almost 15%) in 2025, while it stagnated in the United States (10%). Growth in emerging markets and developing economies (EMDEs) other than China also continued – they represented 6% of global EV battery deployment in 2025, highlighting the increasingly global nature of road transport electrification.

In 2025, the average battery size of battery electric cars remained broadly stable in the European Union and China, at close to 70 kWh and below 60 kWh, respectively. By contrast, average plug-in hybrid electric car battery sizes increased by almost 10% in China, to reach more than 25 kWh, and by almost 15% in the European Union, reaching just over 20 kWh. In the United States, average battery sizes for both battery electric and plug-in hybrid electric cars grew at a similar pace of around 5%, reaching 90 kWh for battery electric cars and less than 20 kWh for plug-in hybrid electric cars.

Average battery prices declined by 8% in 2025, supported by continued improvements in manufacturing efficiency, advances and shifts in battery chemistries and technology, and intensifying global market competition. Relatively low critical mineral prices also contributed to downward cost pressure, although lithium and cobalt experienced notable price increases over the year. The recent increase in lithium and cobalt prices – if sustained – could put upward pressure on battery costs as stockpiles of minerals purchased at lower prices are being drained.

Lithium prices at the beginning of 2026 were more than twice as high as in the same period in 2025, even though they remained around 70% lower than their 2022 peak. Several factors contributed to this rise, including faster‑than‑anticipated demand growth – particularly from the battery energy storage sector –, relatively low inventories in China and temporary supply disruptions, such as the suspension of operations at CATL’s Jianxiawo lithium mine. If these upward price trends persist, they could exert upward pressure on lithium-ion battery prices and reinforce the current momentum behind sodium‑ion batteries, which offer lower ranges but do not rely on lithium. This effect could nevertheless be tempered by existing long-term contracts for lithium supply and vertical integration among major battery producers.

Cobalt prices also doubled over the past year, principally following the Democratic Republic of the Congo’s (DRC) temporary export ban announced in late February 2025, which was later converted into export quotas starting from 16 October 2025. Given that the DRC accounts for almost two-thirds of global cobalt supply, these policy shifts had a significant and swift impact on market prices. Yet the effect of cobalt price fluctuations on overall EV battery costs is far more limited today than in the past. High‑nickel chemistries rely on relatively small quantities2 of cobalt, and lithium iron phosphate (LFP) batteries contain none – together, these chemistries account for the vast majority of today’s EV battery market.

Record low LFP battery prices also contributed significantly to overall battery price reductions in 2025. In 2025, LFP battery packs were more than 40% cheaper on average than lithium nickel manganese cobalt oxide (NMC) alternatives per kWh, although part of this cost advantage reflects the lower energy density requirements of stationary storage applications, which predominantly use LFP3. While LFP batteries benefit from structurally lower material costs, there are growing concerns about the sustainability of today’s price levels. Many cathode active material producers are currently operating at a loss while continuing to expand manufacturing capacity, increasing the risk of market consolidation. This risk may be reduced if cathode producers are able to gain pricing power, but either of these outcomes would put upward pressure on battery production cost.

Over the past few years, the average battery price has decreased across all regions, but regional price disparities have widened. In 2025, battery pack prices in China were 30% lower than in North America, and 35% lower than in Europe, compared to a respective 20% and 25% in 2022.

In 2025, LFP batteries accounted for over 55% of EV batteries deployed globally, up from nearly 50% in 2024. Deployment remains heavily concentrated in China, but uptake is also expanding rapidly in other EMDEs. LFP batteries now power two-thirds of all electric car sales in these economies – double the share in 2023 – driven by imports of Chinese-manufactured vehicles and batteries.

LFP batteries can reduce EV production costs, but their deployment remains mainly concentrated in China, where Chinese companies lead in LFP battery and materials production and innovation.

In the European Union, LFP batteries accounted for more than 10% of EV battery demand in 2025, a similar level to 2024. Nearly all of these batteries were imported from China, either directly (30%) or embedded in LFP‑equipped EVs (nearly 70%).

In the United States, the share of LFP in EV batteries almost halved in 2025 from an already low base in 2024, reflecting higher tariffs on Chinese imports and more stringent sourcing requirements linked to the EV tax credit that was available until the third quarter of 2025. In 2025, over 50 GWh of battery manufacturing capacity, belonging to companies such as LG Energy Solution (LGES) and Ford, was reallocated toward LFP production. This underscores efforts to onshore this technology, albeit largely targeting the battery energy storage market, which is increasingly attracting the attention of battery producers that invested in the United States over the past years. Battery stationary storage accounted for one-third of battery deployment4 in the United States in 2025, and its role is growing as deployments expand across power grids and data centres.

Efforts to onshore LFP battery production represent an important first step to diversifying supplies, but the underlying supply chain remains a critical constraint. Production of LFP cathode materials and their precursors is still almost entirely concentrated in China, which holds the associated manufacturing capacity and the technical expertise. Some diversification options are being developed, such as Korean and Japanese producers investing in the technology, as well as an LFP production base being built in Indonesia. However, changing this structural imbalance will require substantial investments and stronger international co-operation across the entire battery value chain.

Among the major global battery manufacturers, Korean producers have experienced sustained pressure on profitability in recent years, with some – notably SK On – reporting recurring operating losses. By contrast, CATL, the world’s largest battery producer, has maintained strong profitability, recording operating margins of 10‑15% each year between 2020 and 2024, and 18% in 2025. At the same time, CATL’s overseas activities continued to grow in importance – in their 2025 interim report, they indicated that almost 35% of revenue came from overseas activity, up from 30% in the same period of 2024. The battery business of Panasonic, the largest Japanese battery maker, has also maintained sustained profit margins, reaching 10% in 2024 and 14% in 2025, although overall volumes are significantly lower. CATL revenues were slightly larger than the combined revenues of LG Energy Solution (LGES), Samsung SDI, SK On and Panasonic Energy in 2024, roughly 40% larger in 2025,5and continued to grow rapidly in the first quarter of 2026.

A concerning trend is that profitability for several leading non‑Chinese producers has increasingly depended on policy support over the past years. Companies such as LGES and Panasonic Energy benefited significantly from production tax credits in the United States. It was reported that in 2024, both companies would have achieved negative operating margins without these credits, suggesting that tax incentives were the decisive factor keeping operations in positive territory. For example, LGES reported earnings before interest and taxes (EBIT) of more than USD 400 million in 2024, but without US tax credits, the EBIT would have been negative, at around -USD 650 million. In 2025, it would have been ‑USD 200 million. At the same time, these battery producers invested heavily in new manufacturing capacity, particularly in North America. For example, LGES’s annual capital expenditure rose from around USD 3 billion in 2021 to approximately USD 9 billion in 2024, decreasing to about USD 7.5 billion in 2025.

The exposure of Korean and Japanese battery manufacturers to the US market has proven successful in the past years, but it could now place significant stress on their operations. Although the advanced manufacturing production tax credits remain available, accessing these incentives will become increasingly challenging. Eligibility requirements are set to tighten in the coming years, entailing further investment to develop supply chains that are less dependent on China. At the same time, recent policy developments have undermined expectations for future EV battery demand, making it more difficult for producers to justify the additional investments required. In addition, several automakers have scaled back or withdrawn from supply deals or joint battery‑manufacturing initiatives, leaving future investment burdens to battery producers alone.

Battery storage systems are helping absorb the reduced EV‑related demand in the United States, with battery producers increasingly shifting their focus on this segment for the US market. However, battery storage systems are not likely to provide a long‑term solution, as future global battery demand – much like today – is projected to continue to be driven primarily by EV deployment.

The combination of stricter regulatory requirements, softer demand projections and reduced industry partnerships heightens financial and operational risks for manufacturers that have invested heavily in the United States and that are facing tightening margins – with the Korean government recently calling for restructuring of the Korean battery industry.

Today’s record low battery prices are partly sustained by losses incurred further upstream in the supply chain, particularly among producers of cathode active materials (CAMs). Cathode active material is the single most important component influencing battery cell production costs, accounting for 40-50% for NMC batteries and 25-30% for LFP batteries6. Yet many of the leading CAM producers have been operating at a significant loss since 2023.

This challenging market environment is not limited to NMC material producers, whose demand outlook has been dampened by the rapid rise of LFP batteries in recent years. LFP producers in China are also experiencing sustained losses, with the exception of Hunan Yuneng, the world’s largest LFP material supplier. These conditions are unlikely to be sustainable in the long term. They could trigger consolidation in the LFP material market, increasing its market concentration, or lead to greater pricing power among remaining producers. Either outcome could exert upward pressure on battery prices.

The current unattractive investment environment also poses risks for companies seeking to diversify and expand the LFP value chain. Diversification would bring significant advantages from a market resilience perspective, as today the LFP CAM market is almost entirely concentrated in China. However, the risks associated with low or negative profit margins and intense competition, combined with high market concentration, are making raising finance and investment in those sectors more difficult. These risks are shared across other parts of the midstream lithium‑ion battery supply chain, which are also in stark need of diversification.

Global nameplate manufacturing capacity for lithium‑ion batteries reached more than 4 TWh by the end of 2025, up roughly 30% compared to 2024. Year-on-year capacity growth was even faster in the European Union and the United States (at about 50%) than in China (at just over 25%). Capacity outside the largest production regions grew faster still, almost doubling between 2024 and 2025, driven largely by the opening of Envision AESC’s plant in Sunderland, United Kingdom, and investments in Southeast Asia. Nonetheless, global battery manufacturing capacity remains geographically concentrated. China accounts for over 80% of the global total, while the European Union and the United States account for 6-7% each.

Building production capacity is only the first step in developing a competitive industrial base. For most facilities, it can take more than 5 years from the start of operations to reach levels close to nominal output. For example, Tesla’s fully in‑house EV battery manufacturing remains limited, with its first large‑scale production only having started in 2023, notably to supply its Cybertruck. In the meantime, the company has continued to source the majority of its EV batteries from established global players such as Panasonic, LG Energy Solution and CATL. If excluding joint ventures with Asian producers, companies headquartered in North America owned over 35% of nameplate capacity in the United States, largely driven by Tesla. Yet these firms produced only about 3% of the batteries installed in EVs sold in 2025.

Battery production remains geographically concentrated. China, Europe and North America together accounted for about 95% of global output between 2023 and 2025, with China being by far the largest producer, accounting for over 80% of the total in 2025.

In terms of major market players, however, Chinese, Korean and Japanese producers continue to dominate global production, supplying nearly all battery cells used worldwide. The share of Chinese producers in global electric car battery deployment increased further in 2025, reaching almost 75%. The market share of Chinese producers is growing particularly rapidly in the European Union, where they accounted for over half of the market in 2025 – almost double their share in 2023. Their presence in Europe reflects a mix of local production – such as CATL’s plant in Germany – and imports.

The United States is the only major market where the share of Chinese producers declined in the past year, standing at just over 5% in 2025. Panasonic, historically Tesla’s battery partner, remained the country’s largest supplier, providing over 40% of the batteries in US-produced electric cars sold globally in 2025. Over recent years Panasonic has lost some market share as Korean manufacturers – including LG Energy Solution, Samsung SDI and SK On – expanded their production footprint across the US market. However, Korean producers are likely to be more exposed to recent downward revisions of automakers’ electrification plans, as much of their US expansion has been built on close strategic partnerships with companies such as General Motors, Ford and Stellantis, which have recently scaled back their electrification ambitions.

New entrants typically need more time to ramp up than established manufacturers with long-standing expertise in advanced battery production and supply chain management. However, even experienced firms face slower production ramp-up in regions with less mature battery industries, notably because of the lower availability of specialised workforce and production equipment manufacturers to rapidly troubleshoot and resolve production challenges during the ramp-up phase. Establishing an efficient manufacturing base will be essential for Europe and the United States if they are to meet their ambitions of expanding domestic battery production while delivering affordable EVs.

Legacy battery form factor choices continue to shape the industry of today

The lithium-ion battery market is divided across three distinct physical configurations, known as “form factors” – cylindrical, pouch, and prismatic cells. Cylindrical cells were the first lithium‑ion batteries to be commercialised, introduced in 1991 by Sony and benefiting from the maturity of related technologies, notably alkaline batteries, which used this form factor. Japanese manufacturers have since maintained a strong focus on cylindrical cells. Pouch cells enable high energy density and highly customisable dimensions, which helps explain why Korean producers selected this form factor, as their expansion coincided with the rapid growth of the smartphone industry, requiring compact and flexible battery formats. Prismatic cells provide a compact and rigid structure that can be efficiently stacked to maximise space utilisation in EV battery packs, a key reason why Chinese manufacturers – whose growth has been closely linked to EV deployment – have widely adopted this form factor.

Prismatic cells are the most widely used globally today – accounting for over 60% of EV and most stationary storage batteries – largely from Chinese producers. Their performance has improved significantly in recent years thanks to targeted innovations. These include cooling plates used between prismatic cells to increase the cooling speed, as well as cell-to-pack (CTP) and cell-to-chassis (CTC) designs that eliminate the intermediate battery modules and increase overall energy density, albeit introducing additional complications for recycling. These innovations have been particularly important in enabling the deployment of lithium iron phosphate (LFP) batteries in EVs, which today rely almost exclusively on prismatic cells.

The legacy form factors established by Japanese, Korean and Chinese battery manufacturers have played a major role in shaping the battery industry over the past decades and continue to influence it today.

The first electric cars powered by lithium-ion batteries, the Nissan Prairie Joy (1997) and Altra (1998), as well as the Tesla Roadster (2008), used cylindrical cells, reflecting the leadership position of Japanese producers at the time. The Nissan Leaf (2010), the first electric car exceeding 100 000 sales, used pouch cells, while the BMW i3 (2013) was one of the first notable examples of the use of prismatic cells outside of China.

Although the choice between different form factors depends on several parameters – including energy density needs, battery chemistry and battery pack design – historical partnerships between automakers and battery producers continue to shape global and regional markets. In the United States, cylindrical cells remain significant, owing largely to Tesla’s historical partnership with Panasonic, as do pouch cells from Korean producers. The European market is more evenly split between prismatic and pouch cells, reflecting a market divided between Korean and Chinese battery producers. In China, the market is dominated by domestic manufacturers using prismatic cells.

As batteries become more central to energy systems and the wider economy, strategic risks across their supply chains are becoming more pronounced. Battery factories in Europe and the United States rely on imports for the majority of their battery components, which come mostly from China, with Korea also playing a significant role as a supplier of lithium nickel manganese cobalt oxide (NMC) cathodes. The lack of investment in midstream supply chains in these markets poses a growing risk to global supply security.

Production capacity and technical expertise for essential components, such as active materials and their precursors, remain heavily concentrated in China. Korea and Japan are the only other countries with historical midstream battery industries, offering opportunities to diversify some component sources. With sufficient investment, emerging markets and developing economies can also play a growing role, supported by lower production costs and, in some cases, access to integrated mineral resources. Indonesia, for example, now has an anode active material manufacturing pipeline larger than that of Japan or Korea, and its cathode active material (CAM) and cathode precursor industries are also expanding rapidly. Morocco also attracted significant investments in LFP battery and material production.

The most exposed elements of today’s battery supply chains are LFP batteries, materials and precursors, NMC precursors, and graphite anodes7, which are largely reliant on Chinese manufacturing capacity and expertise. When considering only the EV battery chemistries deployed outside China in 2025, almost 80% of batteries used nickel‑containing chemistries, such as NMC, and the remainder used LFP, which almost exclusively relies on Chinese supplies.

Cathode precursors – which serve as an intermediate step between refined critical minerals and the final cathode active materials – are particularly exposed to supply disruptions. They enable tighter control over cathode chemistry, particle size and morphology, and impurity levels, all of which are critical factors determining overall battery performance. Processes that produce cathode active materials without using precursors are being developed and could reduce exposure to highly geographically concentrated supply chains, but they pose greater challenges in ensuring the required consistency in material characteristics and performance.

China’s export controls on key battery components introduced in 2023 underscore the vulnerabilities associated with concentrated supply chains. The latest of such export controls, announced in October 2025 and then paused for one year, could have a particularly large impact, as it would expand restrictions over cathode active materials and their precursors, anode materials, LFP components, and advanced chemistries under development, amplifying supply concentration risks. The restrictions would not only affect the export of products, but also of the related production machineries and technologies, which can significantly hinder countries’ efforts to develop diversified battery supply chains.

Reducing the geographical concentration and improving the resilience of the entire battery supply chain requires a substantial increase in investment, alongside stronger international co-operation across the value chain to create sufficiently large markets, backed by stable policy frameworks, to support these investments.

Efforts to diversify the battery supply chain will need to be underpinned by sound economic fundamentals to succeed. Europe and the United States have attracted significant investment in battery cell manufacturing, supported by large automotive industries that offer predictable sources of demand. Similar conditions also apply elsewhere in supply chains: scaling up midstream production capacity requires stable, large-scale demand to justify investment, with a competitive and reliable battery manufacturing base acting as a critical anchor.

However, cost-competitiveness and profitability remain major challenges. Without considering public support measures, battery production costs in Europe and the United States are still as much as 50% higher than in China – largely because of higher manufacturing efficiency and automation in China, as well as lower material and component costs. At the same time, battery component markets today suffer from low – in many cases negative – profit margins, effectively hampering new investments needed to diversify the existing supply chains.

Achieving manufacturing efficiencies and automation levels comparable to China will take time and sustained investment. When a new producer begins operations, the share of output that is unfit for sale is often much higher than is needed to achieve profitability. Competing in today’s battery market requires reaching average production yields exceeding 90% and automatising production lines to accelerate throughput and reduce labour intensity per unit of output. For regions without a strong industrial base for battery manufacturing, progress will depend on patient investment, long-term commitment, and partnerships with experienced manufacturers and resource-rich countries.

The first sodium-ion battery-powered electric car was introduced in China only in late 2023, but the technology is now being scaled up by leading battery producers such as CATL and BYD. Sodium‑ion batteries perform significantly better at low temperatures than lithium‑ion batteries, particularly LFP chemistries. The latest generation of sodium-ion batteries can retain around 90% of nominal capacity at temperatures as low as -40°C, and can operate at temperatures as high as 70°C. For the largest battery manufacturers, who can maintain multiple supply chains in parallel, expertise and production capacity for sodium‑ion batteries can also help to reduce exposure to lithium price spikes.

Despite recent progress, sodium‑ion batteries remain constrained by lower energy density than lithium‑ion technologies, limiting their competitiveness with LFP batteries at current lithium prices. The latest sodium‑ion cells can reach up to 175 Wh/kg, compared with up to 205 Wh/kg for the latest generation of LFP batteries and 265 Wh/kg for lithium nickel cobalt manganese oxide (NMC) batteries. Their disadvantage is even greater in terms of volumetric energy density (Wh/l), which translates into a driving range of up to 350 km for an average SUV equipped with a sodium‑ion battery, compared with a range of 400-600 km for lithium-ion batteries under average weather conditions.

Sodium-ion batteries are therefore expected to be better suited for small-range electric cars, light commercial vehicles operating in urban areas, two- and three-wheelers, industrial equipment such as forklifts, and battery stationary storage. They can also help reduce range losses in cold weather when used in hybrid EV battery packs combining lithium-ion and sodium-ion chemistries.

Global supply chains for sodium‑ion batteries are also far less developed than for lithium‑ion batteries, limiting the near-term prospect of large-scale deployment. For example, the supply chain of hard carbon – the anode active material used in sodium‑ion batteries as a substitute for graphite – is still poorly developed today and largely concentrated in China. Battery manufacturing capacity is also significantly smaller. Current sodium‑ion battery cell manufacturing capacity is equal to just over 1% of that of lithium‑ion cells, and announced projects for 2030 amount to only about 7% of the committed lithium‑ion manufacturing capacity for the same year.

Solid-state batteries (SSB) have attracted attention and investment thanks to their promise of longer driving ranges and enhanced safety. However, these advantages have not yet been demonstrated in real-world applications. The term “solid-state batteries” covers a wide range of technologies, all of which use a solid electrolyte,8 whereas lithium-ion batteries use a liquid solution of (flammable) organic solvents and a lithium salt as electrolyte.

Semi-SSBs are already commercial and use a solid polymer as electrolyte, which must operate at elevated temperatures (around 60-90°C), at which the polymer transitions into a soft, rubber‑like phase. Almost-SSB and all-SSB designs both operate with solid electrolyte that is maintained in a mechanically rigid state during operation. In the case of almost-SSBs, small volumes of liquid electrolytes are added on the cathode electrode to increase its conductivity. The most frequently mentioned advantages of SSBs – such as enhanced safety – come from almost- or all-SSB designs, which are currently at the prototype stage.

While all-SSB cells are already being produced at small scale for testing purposes, their manufacturing remains more complex and costly than that of lithium‑ion cells, and integrating them into EV battery packs is complicated by stricter mechanical requirements, including the need to apply higher pressure to operate the battery. Among the most advanced are Japanese manufacturer Toyota – which tested a first prototype in 2021 and has announced plans to launch its first all-solid-state battery-powered vehicle by 2028 – and the Chinese firm BYD, which plans to sell its first EV using all-SSB from 2027 and to begin mass production from 2030. Korea’s Samsung has set similar timelines for all-SSB production. Developments are also continuing in the United States. QuantumScape tested its SSB in a motorcycle in 2025, while Factorial Energy announced plans to list on public markets after reporting a real‑world test of well over 1 000 kilometres of range.

The early costs of SSBs are likely to be high, reflecting immature manufacturing processes and supply chains. Premium markets – where customers value additional range and performance – could support early adoption, providing margins for manufacturers to navigate scale-up challenges and work towards lower production costs. Emerging markets, like robotic devices including humanoid robots, could prove an important early source of demand and revenue for SSB producers. Nevertheless, this implies that it will take time for SSBs to make a dent in the EV mass market, and they are expected to remain limited to premium segments until the first half of the 2030s.

Global EV battery demand grows strongly as EV sales continue to expand, including in emerging markets. By 2030, EV battery deployment is expected to reach almost 3 TWh in both the CPS and STEPS, up from around 1.2 TWh in 2025. By 2035, deployment rises further, reaching around 4 TWh in the CPS and almost 5 TWh in the STEPS. To put this in perspective, on average, a single month of EV sales in 2035 would exceed the entire annual deployment of 2021.

Electric cars continue to drive EV battery demand, but the importance of other modes, and particularly of electric trucks, is expected to grow. In both the CPS and STEPS, electric trucks are projected to account for around 10% of total EV battery deployment in 2030 and 2035, up from 8% in 2025.

The gap between current and stated policies and the NZE Scenario is significant, with EV battery deployment reaching around 9 TWh by 2035 in the NZE Scenario – almost double the level in the STEPS that same year.

China, the European Union and the United States are expected to remain the main drivers of EV battery deployment, but their combined share is set to decline over the coming years as deployment in EMDEs grows. In the STEPS, the share of EMDEs in global EV battery deployment rises from around 6% in 2025 to about 15% by 2035, driven primarily by EV uptake in Southeast Asia, India and Latin America. In contrast, the United States sees the sharpest decline in share under the CPS, falling from around 10% in 2025 to less than 5% in both 2030 and 2035, reflecting slower growth relative to other markets.

Battery recycling is crucial for the long‑term sustainability of the battery industry and is likely to become an important future source of critical minerals, strengthening battery supply chain security and resilience. Today, recycling already plays an important role in supporting the battery value chain, primarily through the recovery of production scrap generated during the manufacturing of battery cells and components. However, beyond this, the contribution of recycling to meeting battery critical mineral needs still remains limited.

Deployment of EVs and battery storage systems – together representing around 90% of today’s lithium‑ion battery market – accelerated rapidly from 2020 onwards. Between 2020 and 2025, total lithium‑ion battery deployment across all applications increased more than sixfold and it continues to climb. The associated surge in battery production has driven up demand for critical minerals such as lithium, nickel, cobalt and graphite.

The availability of end‑of‑life batteries for recycling has not increased at the same pace. Nearly all batteries deployed in EVs and stationary storage systems over the past few years remain in use today and most of them will operate until the mid-2030s, and potentially longer. In practical terms, this creates a structural time lag – roughly 15 years – between the growth in EV battery demand and the moment when comparable volumes of these batteries start reaching end of life and become available for recycling.

China has a strong position in access to end‑of‑life batteries, reflecting its status as the world’s largest battery producer and EV market, and it hosts over 85% of global recycling capacity.9 Some recyclers – notably Brunp, the CATL‑affiliated recycling subsidiary – benefit from direct links to major battery manufacturers, giving them preferential access to production scrap and ensuring steady feedstock volumes. However, others face difficulties in securing sufficient material feedstock, as recycling capacity is currently largely in excess compared to available feedstock globally.

Until recently, imports of black mass – a concentrated mixture of the metals originally contained in a lithium-ion battery – were banned in China. This changed in August 2025, when imports of high‑grade black mass were permitted. Import tariffs were also reduced at the start of 2026. While the short‑term impact has been limited, this policy shift could have significant medium‑term implications. In particular, part of the black mass produced outside China may increasingly be sent to Chinese facilities for recycling, attracted by the country’s available recycling capacity, expertise and lower processing costs. Nevertheless, this will also depend on regulations elsewhere, which could limit this flow.

At the same time, battery chemistry preference is shifting towards more affordable options, such as lithium iron phosphate (LFP) batteries, while interest in sodium-ion batteries is growing. This poses challenges for recycling businesses relying on the economic value of the recovered critical minerals, potentially requiring different business models and devoted regulations to ensure that end‑of‑life batteries are properly collected and processed.

Toll-based models, in which the recycler is paid for the recycling service and the customer maintains ownership of the recycled materials, is an alternative approach. This model can be particularly effective when combined with policies that assign responsibility for end‑of‑life batteries to automakers or battery manufacturers, such as under the EU battery regulation or as recently introduced in China. Under such conditions, the main economic driver shifts away from the profit earned from selling recovered minerals – which may be insufficient for lower‑value chemistries – and towards the savings associated with recycling compared with the cost of disposing of used batteries. This can reduce price volatility in recycling services and make recycling economically viable even when the recycling process itself is not profitable on a standalone basis, supporting the role of recycling in making the lithium-ion battery supply chain more resilient while reducing their environmental impact.

Prices for used EV batteries have fallen sharply in recent years, mirroring declines in new lithium‑ion battery prices and critical minerals. Historically, the price of used EV batteries has been particularly high, due to both inventories and the number of transactions being very limited. As flows of used and end-of-life EV batteries start to increase, prices are falling sharply, which over time will increase available material feedstock for recyclers, as well as opening up opportunities for battery reuse.

The used and end-of-life EV battery markets are still at an early stage, and future market dynamics are still to be defined. For example, in the second half of 2025 critical mineral prices began to rise again, while used EV battery prices in Europe and North America continued to fall. If this disconnection continues in the future, it might indicate that used EV batteries could be priced as a function of what downstream markets are willing to pay for reusing them, rather than as inventories of raw materials.

EV battery reuse, for example for energy storage applications, remains challenging. This is because of the safety and warranty requirements for second‑life applications, uncertainty in remaining lifetime, falling prices for new batteries that reduce the economic attractiveness of repurposing, costs of dismantling and repurposing safely used EV battery packs, and the transfer of responsibility for safety, liability, regulatory compliance and end‑of‑life management to the repurposer.

By contrast, the second‑hand EV market is expanding rapidly, and reselling, repairing or refurbishing used vehicles currently generates higher profits than dismantling them for parts. As a result, the batteries inside these vehicles continue to operate for several more years, including in different markets and regions from those where the vehicles were originally sold.

This trend could have important implications for future battery recycling markets, particularly in higher‑income regions such as Europe and North America. A share of the volumes initially expected to become available for recycling may materialise later than previously anticipated, and in different locations. Although recycling will strengthen the resilience of battery supply chains in these markets once sufficient batteries reach end‑of‑life, the growth of second‑hand EV markets may reduce feedstock availability. This could require a recalibration of expectations regarding the contribution of recycling to domestic critical mineral supplies in the coming years.