MIIT issued an announcement abolishing the cascade utilization policy for retired NEV power batteries, discontinuing the cascade utilization enterprise approval system, removing 100 previously approved cascade utilization enterprises from the compliance list, while the regenerative recycling enterprise list remains valid.
Policy "Emergency Brake": Cascade Utilization Completely Halted
On July 30, 2026, the Ministry of Industry and Information Technology officially issued the "Announcement on Abolishing and Revising Policies and Standards for 'Cascade Utilization' of Retired NEV Power Batteries and Regulating Related Industry Activities" (hereinafter referred to as the "Announcement"). The core contents include:
- Abolishing the "cascade utilization" related clauses in the "Industry Normative Conditions for Comprehensive Utilization of Retired NEV Power Batteries (2024 Edition)"
- Discontinuing the "cascade utilization" enterprise announcement management
- 100 previously approved "cascade utilization" enterprises being removed from the compliance list
- The regenerative recycling enterprise list remaining valid
Enterprises removed from the list include industry giants such as Shanghai BYD, Huayou Resources, SVOLT, Gotion High-tech, REPT, and GEM.
What Is "Cascade Utilization"? Why Was It Halted?
Cascade utilization refers to the practice of downgrading retired NEV power batteries (typically with capacity degradation below 80%) for use in energy storage, low-speed electric vehicles, and telecom base station backup power. This model was once highly anticipated as an important way to extend battery lifecycle and reduce total cost of ownership.
However, cascade utilization has exposed multiple problems in practice:
| Issue Type | Specific Manifestation | Risk Level |
|---|---|---|
| Safety Risk | Retired batteries have poor consistency, high thermal runaway probability | High |
| Quality Variance | Mixed use of different batches and brands, uncontrollable performance | High |
| Regulatory Difficulty | Incomplete traceability system for cascade utilization products | Medium |
| Economic Challenges | Dismantling, testing, and reassembly costs remain high | Medium |
| Blurred Responsibility | Difficult to define producer vs. user liability in accidents | High |
Overall, safety risk is the core reason for this policy halt. The chemical characteristics of cascade utilization batteries determine that they still carry thermal runaway risks during long-term use. Once applied in large-scale scenarios such as energy storage, they may cause serious accidents.
Regenerative Recycling Becomes the Only Compliant Path
After the policy adjustment, the processing path for retired power batteries is clearly defined as "regenerative recycling" — recovering valuable metals such as lithium, cobalt, nickel, and manganese from batteries through physical dismantling and chemical extraction, and reintroducing them into the battery manufacturing process.
This shift has profound impacts on all segments of the industry chain:
- Upstream recycling enterprises: Cascade utilization business归零, must transition to regenerative recycling or exit the market
- Midstream smelting enterprises: Increased demand for regenerative recycling, wet metallurgy and pyrometallurgy capacity expected to expand
- Downstream battery enterprises: More standardized sources of recycled materials, beneficial for ESG compliance and cost control
- Vehicle enterprises: Need to cooperate in establishing battery recycling responsibility systems and improving full lifecycle management
For overseas importers, this policy adjustment sends a clear signal: China is significantly raising the safety threshold for power battery recycling. In the future, NEVs exported to Central Asian and Russian markets will also have more standardized battery recycling systems. Buyers interested in China's NEV supply chain compliance dynamics can access the latest information via EX1000.COM.
Industry Shake-up and Standardized Development
The removal of 100 cascade utilization enterprises from the compliance list means the industry will undergo a round of deep reshuffling. The policy signals the following key messages:
- Safety bottom line is non-negotiable: Regardless of how advanced the technology is, the safety red line cannot be crossed
- Stricter regulation trend is clear: Regulatory intensity across the entire NEV industry chain will continue to strengthen
- Circular economy direction unchanged: The shift from "cascade utilization" to "regenerative recycling" maintains the circular economy direction while making the path safer and more controllable
- Accelerating consolidation: Enterprises with regenerative recycling technology and qualifications will gain greater market space
As global NEV ownership continues to climb, power battery recycling has become a common challenge for all countries. China's policy adjustment provides a "safety-first" reference paradigm for other nations.
