The Ministry of Industry and Information Technology, jointly with multiple departments, issued a notice to strongly rectify the battery cascade utilization industry. 100 companies were removed from the white list, with only 20 meeting regulatory standards. The rectification covers environmental protection, safety, and recycling systems, expected to impact over 5 billion yuan in ongoing capacity.
Policy Background: Cascade Utilization Chaos Triggers Regulatory Action
Battery cascade utilization refers to the process of testing, sorting, and reassembling retired EV batteries (capacity below 80%) for applications with lower energy density requirements such as energy storage, low-speed EVs, and communication base stations. This model theoretically extends battery lifecycle and reduces full-life-cycle costs.
However, the cascade utilization industry exposed serious problems during rapid expansion:
Three Major Problems
| Problem Type | Specific Manifestation | Share |
|---|---|---|
| Environmental violations | Heavy metal pollution, electrolyte leakage during dismantling | 35% |
| Safety hazards | Frequent thermal runaway and fire incidents | 28% |
| Data fraud | Tampering with battery health test data, passing off inferior products | 22% |
| Other violations | Unlicensed operations, illegal dumping, etc. | 15% |
Between 2025-2026, 23 cascade battery-related safety incidents occurred nationwide, causing direct economic losses exceeding 300 million yuan. Some companies skipped safety testing during battery reassembly, allowing batteries with internal short circuits to enter the market.
Rectification Measures: White List Cut from 120 to 20
In August 2026, MIIT, the Ministry of Ecology and Environment, and the Ministry of Emergency Management jointly issued the "Notice on Strengthening Regulatory Management of the Battery Cascade Utilization Industry." Core measures include:
White List Drastically Reduced
- Original white list: 120 companies
- Retained after rectification: 20 companies (passed on-site audits, environmental assessments, safety reviews)
- Removed companies: 100, ineligible to reapply for 3 years
The retained 20 companies include: Brunp Recycling (CATL subsidiary), GEM, Huayou Cobalt, Tianqi Shares, and some SMEs with complete recycling systems and testing capabilities.
Higher Entry Thresholds
| Indicator | Previous Requirement | New Requirement |
|---|---|---|
| Annual processing capacity | 1,000 tons | 5,000 tons |
| Testing equipment investment | 2M yuan | 10M yuan |
| Environmental facility investment | 3M yuan | 15M yuan |
| Safety management personnel | 3 people | 10+ with certifications |
| Traceability system | Recommended | Mandatory national platform connection |
Full-Process Traceability
All cascade batteries must connect to the "National Battery Traceability Management Platform," achieving:
- Source traceability: Original vehicle info, usage records, health data
- Destination tracking: Post-cascade application scenarios, service life, secondary retirement time
- Accountability: Clear responsibility at each stage, incident back-tracing mechanism
Strict Quality Standards
Cascade batteries leaving factory must meet:
- Remaining capacity ≥70% of rated capacity
- Internal resistance deviation ≤15%
- Pass overcharge, over-discharge, short circuit, crush, nail penetration tests
- Warranty period ≥2 years
Industry Impact: 5 Billion Yuan Capacity Faces Restructuring
Direct Impact
- Ongoing capacity halted: Of approximately 300,000 tons of ongoing cascade utilization capacity, about 60% (180,000 tons) was halted due to unqualified company credentials
- Equipment investment losses: Equipment already invested by removed companies (approximately 1.5 billion yuan) faces scrapping or low-price transfer
- Personnel displacement: 100 companies involve approximately 30,000 employees requiring job transfers or re-employment
Indirect Impact
- Cascade battery prices: Production costs rise for compliant companies, expected 20-30% price increase
- Energy storage project costs: Industrial/commercial storage projects relying on cascade batteries see 15-20% increase in initial investment
- Recycling channel concentration: Small traders and individual recyclers exit the market, retired battery flows become more centralized
Corporate Responses: Leaders Expand, Laggards Exit
Leading Companies: Counter-Cyclical Expansion
| Company | Original Capacity | Planned Capacity | Advantages |
|---|---|---|---|
| Brunp Recycling (CATL) | 50K tons | 150K tons | Closed-loop industrial chain, abundant capital |
| GEM | 30K tons | 100K tons | Deep tech accumulation, broad customer base |
| Huayou Cobalt | 20K tons | 80K tons | Cobalt/nickel resources, smelting capabilities |
| Tianqi Shares | 15K tons | 50K tons | Equipment manufacturing, high automation |
Leading companies plan to expand to 400,000 tons in the next 2-3 years, basically covering domestic retired battery processing needs.
Laggard Companies: Transform or Exit
The 100 removed companies face three paths:
- Tech upgrade: Invest 20M+ yuan in equipment upgrades, reapply for white list after 2 years
- Business transformation: Shift to battery repair, parts sales, and related fields
- Complete exit: Liquidate assets and exit the cascade utilization industry
Estimates suggest approximately 30% choose tech upgrades, 40% choose transformation, and 30% choose exit.
Outlook: Cascade Utilization Enters Regulated Development
This rectification marks China's battery cascade utilization industry's transition from "wild growth" to "regulated development":
Short-term (2026-2027)
- Tightened cascade battery supply, price increases
- Energy storage project delays or switch to new batteries
- Leading companies expand capacity, market concentration increases
Mid-term (2027-2029)
- New capacity releases, supply-demand balances
- Cascade battery standardization improves
- Industrial synergy with battery swap models and energy storage stations
Long-term (2029+)
- Cascade utilization becomes standard in full battery lifecycle management
- "Battery bank" model matures, cascade batteries become assets
- China's cascade utilization technology and standards exported overseas
The rectification of battery cascade utilization is not the industry's end, but the beginning of healthy and sustainable development. Only regulated companies, strict standards, and complete traceability can make "turning waste into treasure" truly benefit both industry and environment.
More detailed market data and policy interpretation is available at EX1000.COM.
