As April 1, 2026 approaches, China’s battery recycling industry is at a historic turning point. The Interim Measures for the Administration of Recycling and Comprehensive Utilization of Retired NEV Power Batteries (hereinafter the “Measures”), jointly issued by six ministries including the Ministry of Industry and Information Technology, the National Development and Reform Commission (NDRC), and the Ministry of Ecology and Environment, is expected to officially take effect. Hailed as the “strictest in history,” the new regulation marks the industry’s formal entry into an era of stringent, law-based and standardized supervision. China’s NEV sector has been experiencing explosive growth. In 2025, China’s NEV production and sales reached 16.626 million units and 16.49 million units, up 29% and 28.2% YoY, respectively, with NEV new-vehicle sales accounting for 47.9% of total new-vehicle sales. As the capacity of power batteries in previously sold and deployed NEVs continues to degrade, China is about to enter a phase of large-scale power-battery retirements. However, behind the enormous market potential lie daunting challenges. For a long time, the power-battery recycling industry has been characterized by a landscape that is “small, scattered, and disorderly.” A large number of unlicensed small workshops, relying on cost advantages, bid high to seize supply sources of retired batteries, resulting in the distorted phenomenon where “formal players cannot get enough, while small workshops are everywhere.” With the rollout and implementation of the new regulation, the power-battery recycling industry is set to undergo profound changes. Ming Yuebin, Vice President of Battery Technology Co., Ltd., noted: “By strengthening oversight over the recycling and post-processing stages, the new Measures will gradually phase out enterprises that fail to meet environmental protection and safety requirements, and promote the industry’s long-term, healthy development.” In the long run, healthy industry development will also require sustained efforts in technological innovation and public participation. Enterprises need to continuously enhance the intelligentization of recycling and processing, reducing costs and improving efficiency through technological upgrades. Consumers should also strengthen their sense of responsibility, proactively hand retired batteries over to formal channels, and resist the temptation of ‘high-price recycling.’ April 1, 2026 is not only the effective date of a regulation; it is also the watershed moment for China’s battery recycling industry as it shifts from unchecked growth to standardized development. As the era of “formal players” arrives, the 100-billion-yuan-scale power-battery recycling market is set to undergo a value re-rating, laying a solid foundation for the sustainable development of the NEV industry.

In March, China’s composite PMI for aluminum processing registered 65.6%, rebounding strongly above the 50 mark.

In recent years, the most common and straightforward framework for assessing demand across the lithium battery value chain has been to anchor it to EV sales. The logic was simple: the more vehicles sold, the stronger the battery demand; conversely, a slowdown in vehicle sales would imply weaker battery demand. This relationship held true in the early stages of the industry, when EV penetration was rapidly increasing, product structures were relatively simple, and battery demand exhibited a strong linear correlation with vehicle sales. However, this linear relationship is now clearly weakening. Increasing evidence suggests that battery demand is no longer solely determined by vehicle sales , but is increasingly driven by multiple factors, including average battery capacity per vehicle, product mix, commercial vehicle electrification, and export dynamics. 1. The “Vehicle Sales = Battery Demand” Formula Is Breaking Down At its core, vehicle sales represent the number of units sold, while battery demand reflects total energy consumption, i.e., total installed battery capacity. These two metrics only move in tandem when the average battery capacity per vehicle remains stable. Once average battery size increases, or when the sales mix shifts across BEV vs. PHEV, passenger vs. commercial vehicles, the direct linkage between vehicle sales and battery demand begins to decouple. As a result, assessing battery demand today requires answering several additional questions beyond headline vehicle sales: What is the average battery capacity per vehicle? Which vehicle segments are driving incremental growth? Are export flows and regional differences amplifying demand volatility? In other words, the industry is transitioning from a “unit-driven” model to an “energy-driven” model . 2. Rising Battery Capacity per Vehicle: The Primary Driver The most direct reason for the decoupling is the continuous increase in battery capacity per vehicle. This trend is driven by three key factors. First, vehicle upsizing. Both in China and overseas, EV consumption is shifting from basic electrification to enhanced user experience. The rising share of SUVs, pickup trucks, larger sedans, and premium vehicles naturally drives higher battery capacity per vehicle. Larger vehicle size, longer range requirements, and higher performance expectations all translate into higher kWh configurations. Second, the range competition is not over. While the industry has moved beyond the most aggressive phase of “range-at-all-costs,” consumers still place strong emphasis on real-world range, low-temperature performance, highway efficiency, and charging convenience. Even amid intense price competition, automakers are reluctant to reduce battery capacity, as it remains a core determinant of product competitiveness. Third, the growth of premium BEVs and heavy-duty applications. Although EV sales growth is expected to moderate going forward, battery demand is still projected to grow at a faster pace, with increasing battery capacity per vehicle being a key contributor. This reflects a critical shift: vehicles may not be selling faster, but each vehicle is consuming more battery capacity. Therefore, relying solely on slowing vehicle sales growth to infer weaker battery demand may significantly underestimate the offsetting effect from rising battery capacity per vehicle. 3. Product Mix Matters More Than Total Sales Volume Beyond battery capacity, changes in product mix are also reshaping battery demand. For instance, selling one million EVs with a higher BEV share will result in stronger battery demand than the same volume with a higher PHEV share, due to differences in battery size. In other words, shifts between different powertrain technologies directly impact overall battery intensity. Globally, this structural divergence is becoming more pronounced. In Europe, policy adjustments have led to a temporary rebound in PHEVs, which dilutes average battery capacity per vehicle. In contrast, China continues to maintain a high share of BEVs and higher-capacity vehicles, supporting stronger battery demand intensity. Thus, evaluating battery demand today requires understanding not just how many vehicles are sold, but what types of vehicles are driving the growth . 4. Commercial Vehicle Electrification: The Most Undervalued Growth Driver If rising battery capacity per vehicle represents the first layer of demand restructuring, then the electrification of commercial vehicles represents the second—and arguably the most underestimated—layer. Passenger EVs typically carry battery packs in the range of tens of kWh, whereas electric heavy-duty trucks, construction vehicles, and specialty vehicles often require 300–600 kWh or more. This means that a single electric truck can generate battery demand equivalent to multiple passenger EVs . Even with a smaller sales base, incremental penetration in commercial vehicles can significantly amplify overall battery demand. Rising oil prices further accelerate this trend by improving the total cost of ownership (TCO) of electric commercial vehicles, particularly in high-utilization, heavy-load, and fixed-route applications. In such scenarios, electrification becomes economically compelling much faster. As a result, while commercial vehicles are not the largest segment by volume, they are likely to become one of the most powerful “energy leverage” drivers of battery demand in the near term. 5. Exports, Inventory Cycles, and Production Scheduling Are Increasing the Mismatch In addition to end-market dynamics, midstream factors such as exports, inventory cycles, and production scheduling are further widening the gap between vehicle sales and battery demand. On one hand, changes in export policies, overseas customer stocking behavior, and shifts in trade flows can either front-load or delay battery and materials production. On the other hand, inventory cycles are once again becoming a central analytical framework. Automakers and distributors are no longer maintaining stable inventory levels; instead, they dynamically adjust stocking based on sales trends and pricing competition. This means that battery production is increasingly influenced by inventory drawdowns, restocking cycles, and order visibility—rather than simply mirroring real-time vehicle sales. Analyst SMM Lithium Battery Analyst Lesley Yang yangle@smm.cn

[SMM, March 30] Technological iteration in the sodium-ion battery industry accelerated, and the anode-free route achieved a critical breakthrough. Recently, Nayuan New Materials Technology (Wuxi) Co., Ltd. officially released its NFS anode-free sodium-ion battery prototype product. The battery cell's measured energy density reached 220 Wh/kg, significantly higher than the industry's mainstream level of 120 Wh/kg, providing important technological support for sodium-ion batteries to break through performance bottlenecks and expand application scenarios.

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Recently, the team led by Meng Qingbo at the Institute of Physics, Chinese Academy of Sciences, once again set a new record in new-type thin-film PV copper-zinc-tin-sulfur-selenium (CZTSSe) technology, raising the battery’s certified efficiency to 16.6%, marking the technology’s official crossing of the critical threshold for industrialisation from 15 to 16. Composed of common, low-cost elements such as copper, zinc, and tin, CZTSSe materials not only avoid reliance on rare metals but also offer strong resistance to space radiation. At present, the team has also completed the development of high performance flexible batteries and modules, and this technology is expected to achieve large-scale application in fields such as low-Earth-orbit satellite internet, space-based energy bases, and aerospace equipment in the future. This progress not only established China’s internationally leading position in this field, but also opened up strategic, high-value-added application prospects for tin metal in new energy and deep-space exploration.

On the 25th at POSCO Center in Seoul, POSCO Future M signed a memorandum of understanding (MOU) with Kumho Petrochemical and BEI for the joint development of anode-free lithium metal battery technology. The anode-free lithium metal battery under development eliminates the use of an anode material, enabling a 30–50% increase in energy density by utilizing the additional space within the battery.

The lithium mine Zijin Mining Group Co. plans to open this year in the Democratic Republic of Congo is set to be one of the world’s biggest suppliers of the battery metal.The Chinese company – which has grown at breakneck speed to become a top producer of copper and gold – has been developing the Manono lithium project in southeastern Congo since it secured the prized deposit in 2023.

South Korea’s Ministry of Land, Infrastructure and Transport announced that it will pre-announce amendments to the Enforcement Decree and related regulations of the Automobile Management Act to enhance safety management of batteries used in electric vehicles. The revisions include expanded information disclosure and stricter criteria for certification revocation. Under the new rules, consumers will be able to access more detailed information when purchasing EVs, including the battery’s country of origin, manufacturer, and production date.

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