China's EV Boom Created a Battery Time Bomb

China won the EV race. Now it's drowning in dead batteries. The country's first wave of electric vehicles, sold during a government-subsidized boom a decade ago, is reaching the end of the road. This is unleashing a torrent of aging lithium-ion packs that its formal recycling industry is struggling to handle—and it's fueling a dangerous, unregulated gray market.

In August 2025, Beijing resident Wang Lei, 39, decided to sell the compact Chinese EV he’d bought back in 2016. Once a symbol of embracing domestic innovation, his car's shrinking range signaled its battery was dying. Instead of a costly replacement, he found a small recycling shop on WeChat that paid him 8,000 yuan, a sum that grew to about 28,000 yuan ($3,800) with a government scrappage subsidy.

Wang is part of a massive trend. By late 2025, nearly 60% of new cars sold in China were electric or plug-in hybrids. But as these early EVs age, the country is facing a monumental waste problem. The research firm EVtank estimates that 820,000 tons of EV batteries will be retired in China in 2025 alone, a figure set to climb toward 1 million tons annually by 2030.

This flood of waste is testing a recycling ecosystem that is far from mature. When an EV battery's capacity drops below 80%, it's typically retired. Officially, these batteries enter one of two streams: 'cascade utilization,' where they're repurposed for less demanding uses like energy storage, or full recycling, where metals like lithium, cobalt, and nickel are extracted. Both require significant investment in technology and safety.

However, a sprawling gray market of small, illicit workshops is thriving by cutting corners. According to industry professionals who spoke to MIT Technology Review, these operations can offer consumers higher prices because they ignore costs for environmental protection, fire safety, and taxes. “They crack them open, rearrange the cells into new packs, and repackage them to sell,” said Gary Lin, who worked in several unlicensed shops. When batteries are too damaged, he explained, they're simply crushed and the wastewater is “dumped straight into the sewer.”

This poses severe risks, from toxic contamination to fires. The Chinese government has tried to formalize the industry, creating a “white list” of 156 approved recyclers. Giants like CATL and BYD, which together control nearly half the global EV battery market, are also building their own closed-loop systems. CATL’s subsidiary, Brunp, can already process about 270,000 tons of waste batteries annually with metal recovery rates above 99%.

But a critical gap remains. Over the last five years, more than 400 smaller EV startups have gone bankrupt, leaving their vehicles' batteries 'orphaned' without manufacturer support. As these cars age, their batteries are prime candidates for the gray market. “China is going to need to move much faster toward a comprehensive end-of-life system,” warns Alex Li, a Shanghai-based battery engineer. The clock is ticking before the battery wave becomes an environmental catastrophe.

PRISM Insight: China's EV triumph has created its own environmental paradox. The 'battery tsunami' from its first wave of electric cars is more than a waste problem—it's a stress test for the sustainability of the entire global EV supply chain. The thriving gray market threatens to undermine the very concept of a 'clean' circular economy for critical minerals.