China's technical and industrial policies have witnessed a notable shift in how retired electric vehicle batteries are handled. After years of promoting the principle of "Second-Life" or what is known as cascaded battery utilization, Chinese authorities have transitioned to an approach that strictly regulates the process and requires products to meet precise standards for each specific application.
From Comprehensive Promotion to Strict Regulatory Controls
China spent much of the 2010s electrifying its urban bus fleets, with the number of new energy buses reaching 551,400 by the end of 2025, accounting for 87.5% of the country's total urban bus fleet. This early race led China to face an influx of large numbers of batteries reaching the end of their service life inside vehicles before other nations.
In 2021, Chinese government policies encouraged companies to give retired batteries a second life by using them in stationary energy storage systems, backup power supply devices, and charging infrastructure. The economic and environmental logic was that a battery that had lost part of its capacity and was no longer suitable for vehicles still retained sufficient capacity to store electricity in stationary applications, thereby reducing the need to manufacture new batteries.
However, China's Ministry of Industry and Information Technology has begun to change this course. New rules taking effect in April 2026 repealed the previous cascaded utilization framework. Additionally, in an announcement issued on July 30, the ministry rescinded special recognition for companies operating in the cascaded reuse sector and directed industry associations to halt promotional activities related to this sector.
Clarifying the Nature of Restrictions and Security Concerns
Although some reports indicated that this measure constitutes a comprehensive ban on second-life batteries, the reality of the decisions shows that retired batteries can still be used in appropriate applications provided that the final products meet approved standard specifications. Conversely, the reuse of these batteries in electric bicycles and certain other specified light applications has been banned.
The reasons for this regulatory shift stem primarily from safety concerns regarding reassembled batteries that have not undergone sufficient testing, as their remaining capacities vary and the condition of their internal cells differs, increasing the risks of operational failures and operational safety.
Why Does This Shift Matter?
This change reflects a transformation in the economic and technical equation for the battery sector, and its dimensions can be highlighted in the following points:
- Declining Cost of New Batteries: Prices of new lithium iron phosphate (LFP) batteries have dropped significantly, narrowing the price gap between new and old batteries.
- Rising Refurbishment Costs: Testing, reassembling, adding control and battery management systems, and providing warranties for used batteries consume most of the financial savings expected from reuse.
- Direct Competition: Second-life projects have been forced into direct competition with new products specifically designed for energy storage applications and with higher efficiency.
This shift does not mean the end of reuse opportunities entirely. Operators who possess accurate historical records of their batteries and suitable stationary applications hold better operational advantages compared to companies purchasing mixed-source used battery packs. Product quality and effective economic feasibility will remain the primary determinants for the future growth volume of the reused battery market.