China has implemented significant regulatory changes regarding the reuse of retired electric vehicle batteries, marking a shift in policy as the nation addresses the growing volume of battery retirement from its large EV fleet.
In 2021, Chinese regulators established frameworks encouraging companies to redirect aged EV batteries into second-life applications, including stationary energy storage, backup power systems, and charging infrastructure. This approach proved attractive because batteries no longer suitable for vehicle use could retain meaningful storage capacity, potentially reducing demand for newly manufactured units. However, in April 2026, China repealed this cascade-utilization framework. A July 30 announcement from the Ministry of Industry and Information Technology withdrew official recognition for companies operating in this category and instructed industry associations to cease promotional activities related to second-life battery reuse.
Official descriptions of the regulatory shift as a “ban” on second-life batteries do not accurately reflect the change. Retired vehicle batteries remain permitted for suitable applications that meet applicable safety standards. The prohibition specifically targets reuse in electric bicycles and other restricted categories. Ministry officials identified inadequate safety testing of reassembled batteries with varying residual capacity and inconsistent cell conditions as the primary regulatory concern.
China’s policy adjustment carries significant implications because battery retirement has evolved from experimental pilot initiatives into substantial industrial activity. Years of electric bus deployment, expanded battery manufacturing, and investments in material recovery from retired packs have created conditions where early policy assumptions now require reassessment. Additionally, economic factors have shifted the equation: new lithium iron phosphate batteries have decreased substantially in cost, while used packs vary considerably in age, condition, design specifications, and operational history. Testing, repackaging, control systems, and warranties can substantially consume the cost advantages associated with cell reuse.
Operators managing batteries with established histories and access to suitable stationary applications may maintain competitive advantages that companies acquiring mixed retired packs lack. The ultimate scope of second-life battery market development will depend on product quality standards and economic viability of individual projects relative to newly manufactured alternatives.
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