The battery industry has entered a new phase of maturity. According to the latest IDTechEx analysis, lithium-ion battery cell costs have plunged from $168/kWh in 2022 to just over $100/kWh in 2025, with a long-term trend pointing toward $50/kWh by 2036. This is a remarkable shift, driven largely by the growing dominance of LFP chemistries and falling cathode material prices. For electric vehicles and stationary storage, these cost reductions promise major gains in accessibility, scale, and speed of deployment.
Yet behind the encouraging numbers lies a challenging and more complicated reality. As new battery cells become cheaper, many of the business models built around circularity—recycling, second-life applications, and material recovery—face increasing economic pressure. When virgin materials and new cells become lower-cost commodities, the financial incentive to reuse, recover, or repurpose existing batteries will weaken. The challenge for the sector now is to ensure that rapid cost declines do not inadvertently undermine the circular systems we need for long-term sustainability.
This pressure on circularity is not only an economic issue—it also touches on resource security and geopolitical resilience. As battery demand accelerates worldwide, access to critical materials such as lithium, nickel, cobalt, graphite, and rare earth elements becomes increasingly strategic. Many of these resources are sourced from regions vulnerable to political instability, export controls, or concentrated market power. By scaling domestic recycling and recovery, Europe and other home markets can reduce dependence on externally “controlled” raw material supply chains. Circular systems effectively transform end-of-life batteries into domestic resources, improving supply independence and strengthening the security of the energy transition. In this context, recycling serves not only environmental goals but also national and industrial resilience.
Looking at latest events it is encouraging to see that innovation across the circular value chain is beginning to rebalance these dynamics. A recent breakthrough from researchers at the University of Illinois Urbana-Champaign demonstrates how technology can tip the scales back in favour of recycling. Their new electrochemical lithium extraction process, using polymer-coated electrodes, can selectively isolate and recover lithium from spent batteries at high purity and at competitive cost. Unlike many existing recycling techniques, this method is scalable and efficient enough to offer genuine commercial viability. Innovations like this raise the ceiling for what recycled materials can achieve, even in a world where commodity prices are falling.
Similarly, the CircuBAT initiative in Switzerland shows what can be achieved when industry, academia, and public agencies collaborate to build a fully circular battery ecosystem. Over four years, CircuBAT’s partners developed integrated methods for extending battery life, standardising second-life applications, and improving material recovery pathways. Their work proves that circularity in batteries is possible—and practical—when it is supported by coordinated effort, clear standards, and shared incentives.
To navigate this new landscape, the sector must act decisively. Regulation will once again play a central role. Well-designed policies—such as extended producer responsibility frameworks, recycling efficiency standards, and battery passport requirements—can help ensure that circular models remain viable even when the cost of new cells falls. Stability and clarity from policymakers will make it easier for investors to commit capital to recycling and second-life infrastructure.
Manufacturers and suppliers also have a crucial part to play. Designing batteries from the outset with dismantling, material recovery, and digital traceability in mind can significantly lower lifetime costs and increase the overall value recovered at end of life. Meanwhile, companies that take a holistic view—combining first-life battery deployment with integrated recycling and second-life operations—will be better positioned to thrive regardless of market conditions. Integrated models spread risk and capture value at multiple stages of the battery lifecycle.
Finally, innovation must continue to push costs down in circular processes just as quickly as new battery production costs fall. Advances in automated dismantling, high-selectivity recovery, and improved battery diagnostics using AI will help make circularity competitive even in a low-cost battery world.
Ultimately, the falling price of new batteries is undeniably good news. It accelerates the transition to cleaner mobility, expands access to renewable energy storage, and drives industrial competitiveness. But these benefits will be most meaningful if they are achieved together with a robust and economically healthy circular ecosystem. The future of batteries must be both affordable and sustainable. By combining thoughtful regulation, strategic investment in economically sound innovation – which ideally can survive without subsidies, the industry can unlock the best of both worlds—ensuring that the race to the lowest cost does not come at the expense of long-term resilience and environmental stewardship.
