With the booming development of the new energy vehicle industry, China's first wave of power batteries has entered a large-scale retirement phase. Recently, lithium battery recycling projects have been intensively launched across multiple regions nationwide, covering every link of the industrial chain — from dismantling and crushing to hydrometallurgy, from cascade utilization to material regeneration.

With the vigorous development of the NEV industry, China's first batch of power batteries entered a large-scale "retirement period." Recently, lithium battery recycling projects were intensively launched nationwide, from dismantling and crushing to hydrometallurgy, from second-life application to material regeneration, comprehensively accelerating the layout of all links in the industry chain.

Recently, Longnan Economic and Technological Development Zone in Ganzhou, Jiangxi, released the first EIA information announcement for the waste power battery comprehensive utilization project. The project is located in the Electronic Information Industrial Park, Longnan Economic and Technological Development Zone, Ganzhou. It constructs a new waste power battery pack resource utilization production line, with main processes including external screw removal, cover removal, busbar removal, high/low voltage harness removal, module fixing screw removal, and module extraction. Upon completion, it will achieve an annual processing capacity of 10,000 tons of waste Li-ion batteries, yielding 8,000 tons of modules meeting reuse standards and 2,000 tons of hardware materials.

Recently, the planning and natural resources authority of Guangzhou, Guangdong, released the acceptance notice for the retired power battery and waste LIB comprehensive utilization project. The project involves a total investment of RMB 1.22 billion, located in Chini Industrial Park, Chini Town, Huadu District, Guangzhou. It consists of a new energy storage smart manufacturing center, a 60,000-ton/year retired power battery comprehensive utilization and dismantling center, and a 50,000-vehicle/year new energy scrapped vehicle dismantling center. Upon completion, the annual output value will exceed RMB 1.3 billion, with annual carbon emission reduction reaching 1.03 million tons.

[SMM Analysis] The demand along the LFP industry chain continues to rise, but the response from the supply side is significantly lagging. The most notable feature of the current market is that supply tightness is rapidly transmitting from the bottom up, forming a cascading inversion of "battery cell production schedule > LFP cathode production schedule > iron phosphate production schedule," with the slow release of LFP capacity and the iron phosphate industry segment having become the most prominent bottleneck in the entire chain.

[MIIT: Repealing and Revising NEV Used Power Battery "Second-Life Application" Policy Standards] The Ministry of Industry and Information Technology has issued an announcement on repealing and revising new energy vehicle (NEV) used power battery "second-life application" policy standards and regulating related industry activities. The "second-life application" clauses in the *Industry Standards for Comprehensive Utilization of NEV Used Power Batteries* are repealed. The management of enterprise announcements for "second-life application" will no longer be conducted, and enterprises already announced as "second-life application" enterprises will be removed from the list of enterprises conforming to the industry standards for comprehensive utilization of NEV used power batteries. The list of enterprises already announced for disassembly recycling remains valid. Battery products produced by enterprises using used power batteries must meet the quality standards and requirements of their application fields. No organization or individual may use whole used power batteries, or their components processed through splitting, reorganizing, assembling, or related techniques, in the form of battery packs, modules, or cells, in e-bikes or other fields where such use is prohibited by laws, administrative regulations, and mandatory standards.

In July, China’s EV battery cell output rose about 10% MoM, with LFP technology continuing to serve as the primary driver of growth. Demand side, new car models kept increasing vehicle battery capacity, while accelerating commercial vehicle electrification jointly lifted power battery cell demand. Among these, LFP power batteries, leveraging cost advantages and safety, saw further penetration rate gains in both passenger and commercial vehicle segments, becoming a key force in the overall output expansion. Notably, expectations of the formal battery consumption tax taking effect in early September had a certain pull-forward effect on production schedules for July–August. Some battery companies and automakers stepped up stockpiling ahead of the policy window to reduce subsequent tax costs. Against this backdrop, August power battery cell production schedules are expected to maintain a robust growth rate of around 8% MoM for both LFP and ternary power battery cells, supported by peak-season stockpiling and the “consumption tax rush.” Looking ahead, as the “installation rush” effect gradually fades, the pace of power battery cell production scheduling in September is expected to slow, with MoM growth possibly retreating to the 5%–6% range. In the longer term, once the consumption tax policy is implemented, all segments of the battery industry chain will face a new round of cost pass-through and price competition, and enterprises’ production planning strategies will shift from “policy-driven” to “demand-driven,” with the market poised to enter a new rebalancing phase.

[SMM Analysis: Raw Material Price Hikes Push Up Production Costs, Electrolyte Prices Start an Upward Trend] Recently, upstream raw materials for electrolyte—including additives, lithium chemicals, and solvents—have all seen price increases, continuously squeezing the profit margins of electrolyte enterprises. As cost pressure is gradually transmitted downstream, the electrolyte has entered a price hike cycle.

On July 30, 2026, the Ministry of Industry and Information Technology (MIIT) issued an announcement abolishing the second-life application clauses in the Industry Standard Conditions for Comprehensive Utilization of Used NEV Power Batteries (2024 Edition). It will no longer carry out announcement management for second-life battery producers, and all such producers previously included in the announcement list were removed.

Sentiment in China’s battery-grade manganese sulfate market has gradually returned to rationality, as the flood-related factors that previously lifted prices in Guangxi continue to ease.In early July, continuous heavy rainfall and floods hit major production areas in Guangxi. Rising river levels and disrupted logistics forced multiple manganese sulfate producers to suspend operations for safety inspections and equipment maintenance, triggering a temporary shrinkage of available spot supply.