China’s extensive deployment of battery-electric buses over the past decade has created a significant volume of retired vehicle batteries requiring disposition. By the end of 2025, the country operated 551,400 new-energy urban buses, comprising 87.5% of its total fleet. This early adoption has positioned China ahead of other nations in confronting the challenge of managing batteries that have reached the end of their automotive service life.
In 2021, Chinese policy established a framework encouraging second-life applications for retired EV batteries in stationary energy storage systems, backup power supplies, and charging infrastructure. The approach appeared economically sound, as batteries with diminished capacity for vehicle use could retain substantial utility for stationary purposes, potentially reducing demand for newly manufactured batteries.
The regulatory environment has shifted considerably. New rules that took effect in April 2026 eliminated the previous cascade-utilization framework. An announcement from the Ministry of Industry and Information Technology in July 30 rescinded official recognition of cascade-utilization enterprises and instructed industry associations to cease promotional activities supporting this category. Notably, this change does not constitute a complete prohibition on second-life battery applications; retired batteries may continue to be deployed in appropriate uses that meet applicable safety standards. However, reuse in electric bicycles and similar restricted applications is now prohibited. The ministry cited safety risks associated with inadequately tested reassembled batteries that may exhibit varying capacity levels and inconsistent cellular conditions.
The regulatory adjustment occurs as battery retirement transitions from experimental pilot initiatives to mainstream industrial activity. Extended operational periods of electric bus fleets, expanded manufacturing capacity, and substantial corporate investment in material recovery have created new economic realities. Additionally, the sharp decline in lithium iron phosphate battery costs has altered the cost-benefit calculation for second-life deployment. Remanufactured packs must now compete directly with new batteries specifically engineered for stationary applications, while factors such as testing, repackaging, controls, and warranty obligations can substantially erode the financial advantages of material reuse.
Market dynamics will likely determine the ultimate scope of second-life battery applications. Organizations with comprehensive battery history documentation and defined stationary use cases may retain competitive advantages over entities acquiring mixed retired packs from various sources. The intersection of product quality standards and economic viability will shape how extensively the anticipated second-life battery market develops going forward.
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