China Strengthens EV Battery Recycling Framework: What The 2026 Interim Measures Mean For Foreign Investors

Introduction

On 16 January 2026, China’s Ministry of Industry and Information Technology (MIIT), together with five other government bodies, jointly published the Interim Measures on the Recycling and Comprehensive Utilisation of Retired New Energy Vehicle (NEV) Power Batteries (the “Measures”). The Measures took effect on 1 April 2026 and mark an important shift in China’s regulation of the NEV aftermarket, moving from policy guidance to a mandatory compliance framework.

China’s NEV market has expanded rapidly in recent years, with production and sales exceeding 16 million units in 2025, accounting for nearly half of all new vehicle sales nationwide. As the first generation of EV batteries approaches the end of its lifecycle, China is entering a large-scale battery retirement phase. The new Measures codify the principles set out in the State Council’s 2025 Action Plan, creating a unified legal standard governing the entire process.

Key Features: Full-Lifecycle Management System

The Measures establish a comprehensive “cradle-to-grave” management system for retired power batteries, designed to improve traceability, environmental safety and resource efficiency. Key elements include:

1. Digital Traceability: Each power battery must be assigned a digital identity (“Digital ID”), recorded in a national traceability platform. The objective is to ensure that batteries remain within regulated recycling channels and that their origin, usage history and material composition can be verified.
    
2. Mandatory Data Reporting: All stakeholders, including manufacturers, recycling service outlets and comprehensive utilisation enterprises, are legally required to upload detailed data to the national platform within strict timelines.
    
3. Closed-Loop Recycling: To prevent batteries from flowing into informal channels, the regulation introduces a “vehicle-body integration” scrapping system. This requires end-of-life vehicles to be scrapped with their batteries intact; a missing battery will result in the vehicle being deemed incomplete.
    
4. Enhanced Accountability and Prohibitions: Automakers and battery manufacturers are responsible for establishing battery collection and recycling networks. The Measures also prohibit the use of retired or repurposed EV batteries in electric bicycles or other unauthorised applications, addressing safety risks linked to uncontrolled secondary use.

Implications for Foreign Investors

For international companies seeking to participate in China’s sustainable technology ecosystem, the Measures present a dual narrative of regulatory tightening and growing market opportunity.

1. Greater Regulatory Clarity
   By transforming previous policy guidance into a binding legal framework with defined compliance obligations and administrative penalties, the Measures significantly reduce regulatory uncertainty. For foreign investors who have been cautious due to fragmented industry standards, this shift provides greater predictability and a clearer compliance environment.
    
2. Access to a Large and Formalising Market
   China is entering a “scaled retirement” phase for EV batteries. Industry projections cited by regulators indicate that annual volumes of retired power batteries may exceed 1 million tonnes by 2030, with the recycling market expected to surpass RMB 100 billion. As the Measures channel batteries into formal recycling systems, demand will increase for advanced recycling technologies, efficient material recovery solutions and compliant processing facilities.
    
3. Opportunities for Technology Collaboration
   The introduction of battery digital identities and traceability systems aligns China’s regulatory approach with international developments, including the EU’s battery passport concept. This convergence creates opportunities for foreign companies—particularly those with strengths in digital traceability platforms and smart dismantling technologies—to collaborate with Chinese manufacturers, recyclers and research institutions. Such partnerships may take the form of joint R&D initiatives, technology licensing arrangements or investments in specialised recycling facilities.

Conclusion

The 2026 Interim Measures will significantly reshape China’s EV battery recycling landscape. By introducing mandatory traceability, formal recycling channels and a clearer allocation of responsibilities across the value chain, the regulation establishes a more transparent and scalable regulatory environment.

For Dutch and other international companies—particularly those with advanced capabilities in sustainable recycling technologies, digital lifecycle management systems and battery material recovery—the new framework creates expanding opportunities for investment, technology deployment and industrial collaboration with Chinese partners.

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