What is the state of direct recycling?

Direct recycling is a process in which the cathode and anode active materials within scrap batteries are regenerated without breaking them down into individual battery chemicals as is required by more traditional battery recycling methods.

Whilst direct recycling can have a higher recovery rate than other methods such as hydrometallurgy, its commercial adoption is hindered by its technological immaturity and the need for well-sorted waste streams.

China is leading the way in the technology, with commercial direct recycling of high-grade production scrap growing in the country. However its application to end of life material and in regions outside of China is limited. In 2025, just 3% of global recycling capacity was for direct recycling with all such projects located in China according to Benchmark’s Recycling Service.

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How does direct recycling work?

The first step of the direct battery recycling process is the discharging and dismantling of the battery pack. In some instances mechanical shredding is used.

The material regeneration steps are the primary source of variation between companies. Where shredding is not involved, electrode sheets can be separated and the anode and cathode material can be extracted from the current collector foils using sonication or solvents such as dimethyl carbonate, N-Methyl-2-pyrrolidone (NMP) and, in some cases, water.

The recovered electrode material can then be regenerated into its battery grade form. In cases where lithium has been lost from the cathode during cell cycling, relithiation is necessary to recover battery grade materials. To regenerate electrode materials, direct processes include using plasma-assisted separation or hydrothermal treatment followed by annealing. There are several market participants with plans to employ these technologies commercially, however direct recycling operations are limited currently. Scaling of direct recycling processes are reliant on improvement and modification of these methods in upcoming years.

This method is in contrast to hydrometallurgical recycling which requires battery scrap first be shredded and separated into black mass. This is then refined using strong acids and other chemicals to obtain battery chemicals such as lithium carbonate and nickel sulphate.

Hydrometallurgy is more mature battery recycling technology than direct recycling, but suffers significant efficacy losses in practice. By contrast, direct recycling theoretically has the highest recovery rates of all battery recycling methods as the active materials are not broken down into their constituent chemicals where most losses are. The active materials’ structures and stoichiometries are also maintained.

What are the challenges with direct recycling?

Direct recycling processes are not yet being scaled to meet the demand that will be placed on the recycling market in coming years.

The processes are chemistry-specific and sensitive to the module format (i.e., cylindrical, prismatic or pouch), meaning the feedstock must be carefully controlled. Many regions do not have fully matured recycling collection schemes meaning scrap is often highly heterogeneous, containing an unpredictable mixture of chemistries and formats.

This is often why recycling companies opt to use direct recycling alongside cell production lines, or using supply and offtake agreements with specific customers to ensure the cathode chemistry is uniform.

For end of life (EOL) material, one technologically challenging step within direct recycling is relithiation. Lithium losses in the cathode are inevitable during cell cycling, and relithiating the spent material ensures that the cathode returns to its original composition and structure for reuse in new lithium ion batteries.

Even if the technical barriers associated with direct recycling of EOL scrap are overcome, another challenge is that once a battery becomes EOL scrap, its chemistry may be outdated. This means that regeneration of the same material then requires further treatment to generate up-to-date materials.

Who is exploring direct recycling?

Globally, direct recycling capacity is set to triple between 2025 and 2030 with several projects planned or under construction.

Outside of China direct recycling is in its preliminary stages of commercialisation, and the recycling routes that developers take vary drastically. Most direct methods are tailored to specific cathode chemistries rather than to all lithium ion batteries.

Direct recycling has been of particular interest for companies looking to recycle cheaper cathode chemistries, such as LFP, as this process ensures that margin lowering waste products are avoided. Companies that have reported the development and/or adoption of direct recycling processes include Huayou Cobalt, Rikomay, BMW/Encory, Li-Circle, Li Industries, Princeton NuEnergy, KYBURZ, and Exigo, to name a few.