The Circular Battery Economy Set to Surge to Nearly $78 Billion

By Michael Kern - Dec 04, 2025

• The global circular battery economy is projected to grow from $23.29 billion in 2024 to nearly $78 billion by 2032, driven by the need to secure critical minerals.
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• Battery recycling has evolved from an environmental initiative to a geopolitical necessity, with Western nations pushing to localize supply chains to reduce dependence on foreign processing.
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• The sector is currently navigating a "feedstock gap" where recycling capacity is expanding faster than the immediate supply of end-of-life batteries, but government policies like the IRA are providing crucial support and incentivizing domestic recovery.
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As the global energy transition accelerates, the race to secure critical minerals is shifting from remote mines to battery recycling facilities. 

A new report projects the global circular battery economy will surge from $23.29 billion in 2024 to nearly $78 billion by 2032. However, this aggressive growth forecast comes amid a turbulent period for the industry, characterized by volatile commodity prices and a race to build infrastructure before a tidal wave of spent electric vehicle (EV) batteries hits the market.

From Environmental Niche to Strategic Necessity

The shift toward a circular battery economy, where materials are recovered, recycled, and reintroduced into the supply chain—,  no longer viewed merely as an environmental initiative. It has become a geopolitical imperative.

With more than 70 percent of the world’s cobalt and 60 percent of lithium processing concentrated in a handful of countries, Western nations are increasingly viewing recycling as a matter of national security. The United States and European Union are aggressively pushing to localize supply chains to reduce dependence on foreign processing.

According to the report, this "urban mining" sector is expected to grow at a compound annual growth rate (CAGR) of 16.28 percent through 2032. The primary driver is the urgent need to bridge the widening gap between the soaring demand for EV batteries and the finite supply of virgin raw materials like lithium, nickel, and cobalt.

The Feedstock Gap and Industry Growing Pains

While the long-term trajectory is bullish, the industry faces immediate hurdles. The sector is currently navigating a "chicken-and-egg" dilemma: recycling capacity is expanding rapidly, often outpacing the current availability of feedstock.

Most EVs currently on the road are relatively new, meaning the anticipated deluge of end-of-life batteries has not yet fully materialized. Data indicates that by 2030, approximately 1.4 million tons of EV battery waste will enter the recycling stream, a figure expected to balloon to 8 million tons by 2040. Until then, recyclers are fighting for limited scrap material, squeezing margins.

This volatility has impacted major players.

For instance, Li-Cycle Holdings Corp., a prominent name in the sector, paused construction on its massive Rochester Hub in New York amidst rising costs, highlighting the capital-intensive nature of scaling these technologies. Meanwhile, competitors like Redwood Materials and Glencore plc continue to scale operations, securing partnerships with major automakers to lock in future feedstock.

Policy Tailwinds Driving Investment

Despite short-term headwinds, government policy is providing a massive floor for the market. In the United States, the Inflation Reduction Act (IRA) has allocated billions to clean tech manufacturing, explicitly incentivizing domestic material recovery.

The U.S. market alone contributed 38 percent of the global circular battery economy in 2024, valued at $8.8 billion. With federal incentives pushing for domestic content in EV batteries, automakers like Tesla, BMW, and Toyota are mandating minimum recycled content targets. This regulatory pressure is forcing a rapid maturation of the "black mass" market—the intermediate product resulting from shredded batteries that contains valuable metals.

Technological Evolution: Closing the Loop

Technologically, the market is dominated by lithium-ion battery recycling, which accounted for 64 percent of total revenue in 2024. As the industry matures, the focus is shifting toward hydrometallurgical processes (chemical leaching). Unlike older smelting methods, hydrometallurgy allows for recovery rates of up to 95 percent of critical minerals, making it the preferred route for producing battery-grade materials that can compete with virgin mining.

Future Outlook

The circular battery economy is poised to define the next decade of the energy transition. By 2032, recycled materials are expected to supply a significant portion of global demand, with some projections suggesting recycled lithium could meet a quarter of the world’s needs.

As the first generation of mass-market EVs begins to retire in the coming years, the recycling sector will face its true test: proving it can scale efficiently enough to turn a mounting waste problem into a sustainable energy solution.

By Michael Kern for Oilprice.com