By Owais AliReviewed by Frances BriggsOct 6 2025Rising battery demand is straining resources and recycling systems. Embracing circular economy principles could make lithium-ion batteries cleaner, longer-lasting, and less dependent on scarce materials.
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Lithium-ion batteries (LIBs) have been central to the global energy transition, enabling electric vehicles, portable electronics, and grid-scale storage through their high power density, energy efficiency, long cycle life, rapid charging capabilities, and operational versatility across a wide range of temperatures.
But with rapid adoption comes a mounting set of sustainability challenges. Chief among them: how to manage the battery's full lifecycle in a way that doesn't simply shift environmental costs elsewhere.
Further issues include their dependence on geographically concentrated critical materials, such as lithium, cobalt, and nickel, environmental impacts from resource extraction and processing, and challenges in end-of-life management, including safe disposal and recycling inefficiencies. To address these issues, the circular economy model offers a framework for extending material lifecycles through systematic recycling and reuse within the supply chain.1
The Circular Economy Framework for Lithium-Ion Batteries
Design for Recycling
Circularity begins from the bottom up. Designing batteries with their end-of-life in mind, from disassembly and reuse to recyclability, is critical to improving material recovery and reducing environmental harm.
More recent approaches focus on modular architectures, standardized components, and simplified fastening methods that facilitate disassembly and separation of critical materials such as lithium, cobalt, and nickel. Recyclable binders, water-based solvents, and benign electrolytes reduce hazardous outputs, while reversible assembly techniques, such as mechanical joints instead of adhesives, improve dismantling efficiency.
Digital product passports, which contain data on material composition, chemistry, and usage, are being explored as tools to support automated sorting, enhancing traceability, increasing recovery rates, and lowering costs.
By embedding recyclability at the design stage, lithium ion batteries can shift from a linear life cycle to a resource-efficient closed-loop system, supporting sustainable integration into future energy infrastructures.2
Reuse and Repurposing
While recycling recovers raw materials, reuse can offer greater immediate returns, both environmentally and economically. EV batteries, for example, are usually retired when their capacity drops to 70 to 80 %, as they are no longer suitable for high-performance applications. However, they can still be useful in less demanding roles.
Second-life strategies exploit this residual capacity by redeploying retired LIBs in stationary energy storage systems, backup power supplies, and grid-balancing operations. Depending on chemistry and degradation mechanisms, service lifespans range from up to 30 years in fast-charging stations to approximately 12 years in residential storage and six to 12 years in grid-level systems.
Industrial-scale projects, such as the RWE–Audi collaboration in North Rhine-Westphalia that transformed 60 retired EV batteries into a 4.5 MWh storage installation, demonstrate the feasibility and value of such initiatives.
By reducing reliance on new raw materials and lowering the embedded carbon footprint of battery production, second-life applications strengthen the resilience of the LIB value chain and represent an essential step toward sustainable circular economy integration.1,3
Recycling
When reusing is no longer possible, recycling is essential for reducing LIB's carbon footprint. Techniques such as hydrometallurgical, pyrometallurgical, and direct regeneration processes can be used to recover valuable metals, including lithium, cobalt, and nickel.
The problem with recycling electric car batteries
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Hydrometallurgical methods use acid leaching and purification to reintroduce recovered materials into the supply chain. Pyrometallurgical processes, by contrast, rely on high-temperature smelting to extract metals, but due to these raised temperatures, they are often energy-intensive and less efficient for low-volume feeds. Direct regeneration, although still in its experimental stage, aims to replenish lost lithium and restore the electrochemical performance of spent cathode materials, providing a more environmentally sustainable option.
EV industry leaders have begun to implement closed-loop strategies for end-of-life battery management, prioritizing maximal material recovery and reintegration into production.
In 2023, Tesla’s recycling operations recovered enough material to manufacture 43,000 Model Y vehicles, demonstrating the scalability of large-scale recycling. Such efforts reduce waste, decrease dependence on primary resource extraction, and enhance the overall sustainability of the battery supply chain.1,4,5
Rethink and Reduce Approaches
Rethink and reduce processes can address core consumption within battery electric vehicle ecosystems.
The rethink approach promotes a transition from private ownership to shared and service-based mobility, exemplified by companies such as MOIA, BlaBlaCar, and UberXShare. These companies employ carsharing and pooling services to reduce reliance on individual vehicles while enhancing efficiency.
The reduce strategy aims to minimize the material and energy intensity of battery production by advancing alternative chemistries. Tesla’s large-scale adoption of cobalt-free lithium-iron-phosphate (LFP) batteries and the increasing use of sodium-ion batteries exemplify this approach, potentially reducing reliance on critical resources such as lithium.
Collectively, these strategies advance resource efficiency, reduce environmental impacts, and improve the resilience of the battery supply chain.6
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Challenges and Solutions
Despite academic and industrial interest, circularity in LIBs remains difficult to implement at scale.
Battery design remains a central challenge, as current casings, holders, and modules are not engineered for easy disassembly and so require destructive techniques that increase waste and energy use. Limited infrastructure for sourcing end-of-life batteries persists outside regulatory frameworks in the European Union, Japan, China, and select North American regions, leading to widespread landfill disposal.
There are also safety risks associated with improperly handling charged or partially charged batteries, as this can trigger thermal runaway through short-circuiting or electrolyte decomposition. Meanwhile, consumer perception often regards recycled materials as of low quality, which constrains market acceptance.
To address these challenges, design-for-recycling principles that integrate machine-assisted dismantling can minimize destructive disassembly, and strengthened extended producer responsibility (EPS) frameworks, deposit-return schemes, and coordinated collection systems can secure reliable end-of-life battery flows.
Safety concerns may be mitigated through non-destructive regeneration techniques that restore cathode performance while reducing pretreatment steps, and consumer confidence can be improved through public awareness campaigns, third-party certifications, and independent testing that demonstrate the reliability of recycled materials.1,7
When integrated together, these measures could create the infrastructure needed to support a functioning circular battery economy, one that reduces waste, secures resources, and supports sustainable electrification.
References and Further Reading
- Vinayak, A. K., Li, M., Huang, X., Dong, P., Amine, K., Lu, J., & Wang, X. (2024). Circular economies for lithium-ion batteries and challenges to their implementation. Next Materials, 5, 100231. https://doi.org/10.1016/j.nxmate.2024.100231
- Chigbu, B. I. (2024). Advancing sustainable development through circular economy and skill development in EV lithium-ion battery recycling: A comprehensive review. Frontiers in Sustainability, 5, 1409498. https://doi.org/10.3389/frsus.2024.1409498
- Audi Media Center. (2022). Second life for EV batteries: Audi and RWE build new type of energy storage system in Herdecke. https://www.audi-mediacenter.com/en/press-releases/second-life-for-ev-batteries-audi-and-rwe-build-new-type-of-energy-storage-system-in-herdecke-14465
- Dunn, J. (2022). Lithium-ion battery material circularity: material availability, recycling economics, and the waste hierarchy (Doctoral dissertation, University of California, Davis). https://www.proquest.com/openview/36d355bfc316ae5dea4d8106c520d8fd/1?pq-origsite=gscholar&cbl=18750&diss=y
- Cintra, R. S., Avila, L. V., Schvartz, M. A., Filho, W. L., Anholon, R., Moraes, G. H., Siluk, J. C., Lisboa, G. D., & Khaled, N. N. (2024). Analysis of the Life Cycle and Circular Economy Strategies for Batteries Adopted by the Main Electric Vehicle Manufacturers. Sustainability, 17(8), 3428. https://doi.org/10.3390/su17083428
- World Economic Forum. (2023). A Circular Economy Approach to Battery Electric Vehicle Supply Chains. https://www3.weforum.org/docs/WEF_A_Circular_Economy_Approach_to_Battery_Electric_Vehicle_Supply_Chains_2023.pdf
- Heath, G. A., Ravikumar, D., Hansen, B., & Kupets, E. (2022). A critical review of the circular economy for lithium-ion batteries and photovoltaic modules – status, challenges, and opportunities. Journal of the Air & Waste Management Association, 72(6), 478–539. https://doi.org/10.1080/10962247.2022.2068878
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