The Real Battery Economy, Seen Through Prices

How falling battery prices and rising material values are reshaping reuse, recycling, and EV trade

For several years, discussions around the circular economy of EVs and EV batteries have been dominated by forward-looking narratives: future waste volumes, future shortages of critical materials, future recycling capacity. What has largely been missing is evidence of how the system behaves once volumes are real, assets are ageing, and prices begin to move against expectations.

Over the past two weeks, three CES reports have provided precisely that evidence.

Individually, each tells a familiar story. Taken together, they describe something more uncomfortable — and more useful: the first clear market signals of how the battery economy actually functions as the EV industry comes of age.

The first signal comes from used EV battery prices. In Q4 2025, average observed prices fell to $43.9 per kWh in Europe and $44.2 per kWh in North America, down 26.5% quarter-on-quarter and 33.3% year-on-year. Given that many of these batteries are more than a decade old, these price levels may still appear surprisingly high to those who have not followed the market closely. Only three years ago, however, comparable batteries were trading at more than three times these levels.

What makes this development notable is not the decline itself, but its timing. Over the same period, battery material values increased by roughly 20%, driven primarily by higher lithium, cobalt, and copper prices. Based on CES’s material price and battery composition data, the theoretical recovery value of batteries has strengthened — yet the market price of used packs has continued to fall.

That divergence tells us something fundamental: used EV batteries are not priced as inventories of raw materials. They are priced as products, based on what downstream markets are willing — and able — to absorb.

In Q4, that disconnect became visible at scale. CES observed lowest prices below the recovery value for battery packs representing 27.7% of ordinary end-of-life volumes in Europe and 31.2% in North America. Not all batteries trade at these levels — but enough do to signal a structural shift in market behaviour.

The immediate reaction might be to assume this finally opens the door for recycling. Cheaper feedstock combined with stronger material prices is, in principle, exactly what both pre-processors and material recovery players need to operate at higher utilisation and cover high fixed costs.

The second signal, however, suggests that this opportunity is unevenly distributed.

For many pre-processors, the recent increase in raw material prices is clearly positive. For material recovery players in Europe and the US, the picture is more ambiguous — largely because lithium has become one of the main drivers of price increases.

Despite nearly a decade of Western investment in battery recycling startups and research projects, lithium recovery capacity outside China and South Korea remains limited. Refineries with strong lithium recovery capabilities can therefore offer better prices — often implicitly, by paying more for nickel and cobalt content — while facilities without such capabilities struggle to compete. In practice, lithium may currently be in its most challenging position in markets with weak recovery infrastructure: priced high enough to divert volumes toward regions with better processing capability, but not high enough to justify rapid investment in new recovery capacity.

In that sense, rising lithium prices are not merely a tailwind. They are a sorting mechanism, favouring players with the right capabilities and exposing pricing structures that are no longer fit for purpose.

Still, even stronger black mass prices do not guarantee domestic recycling volumes. The third signal makes that clear.

In 2025, Ukraine imported 107,000 EVs of which over 84,000 were used, setting a new record and cementing its position as the world’s leading importer of used electric vehicles. To put that into perspective, this figure is equivalent to roughly the total number of BEVs sold in the US in 2016, just ten years ago. In our report, we explain why this particular surge may not continue at the same pace in 2026. Ukraine is not alone, however. Markets such as Georgia, Jordan, and Kazakhstan are increasingly competing for the same vehicles.

Falling battery prices are central to this dynamic.

As battery values decline, dismantlers recover less value from end-of-life EVs. That weakens their economics relative to export markets that can repair, refurbish, and remarket vehicles at higher prices. The trade is difficult to argue against: selling a vehicle intact for several thousand dollars often beats dismantling it for parts in markets where residual values are steadily eroding.

The result is that batteries do not disappear — they simply remain inside vehicles, operating for several more years, but in different markets. Recycling volumes arrive later, and often somewhere else.

Taken together, these developments challenge a long-held assumption: that recycling feedstock will naturally accumulate in Western markets once EV volumes grow large enough. Instead, the data points toward a more competitive and dynamic system — one in which value leaks upstream and across borders unless it is actively captured. This dynamic has long been reflected in our forecasts; it is now unfolding in real time.

Still, this is also where falling battery prices become less of a threat and more of an opening.

For years, reuse and repurposing struggled because used packs were priced too close to new alternatives. That gap has now widened materially. The delta between new and used batteries — long discussed in theory — is finally emerging in practice. This creates room for standardisation, scale, and margin in reuse markets that previously remained confined to pilots, R&D projects, and recall volumes.

To truly unlock what CES refers to as “The Real Battery Economy” — where value is generated over time through use rather than realised only at end of life — solutions are needed further upstream. The fact that battery prices have fallen not only for packs over ten years old, but also for batteries less than five years old, illustrates how difficult it remains for dismantlers to build viable business models around reuse and upgrades. Combined with low residual vehicle values, this makes it increasingly hard to retain both used and damaged EVs in their original markets when demand elsewhere is strong.

This is where both the challenge — and the opportunity — lies.

Last week, Chinese automaker NIO announced it had completed its 100 millionth battery swap across a network of more than 3,790 swap stations, having doubled cumulative swaps in less than 18 months. If the company maintains growth even on a conservative trajectory, CES estimates that more than 40% of its gross revenues could come from swapping and charging services by 2035, giving its earnings profile more in common with digital and infrastructure businesses than traditional car manufacturers. Just as importantly, NIO retains control over its battery fleet throughout its lifetime, monetising batteries both as services and ultimately as assets.

Battery swapping may be a far-fetched strategy for many automakers — let alone for reuse and recycling companies — and the recent struggles of startup Ample underline the operational challenges involved. But the broader point stands: value in the battery economy is created by using and controlling assets over time, not merely by producing them or processing them at the end of life. If downstream players do not develop strategies to participate earlier in the value chain, they remain exposed to those who do.

Understanding where that value sits — and how it moves — requires consistent and granular data, not assumptions. Data that can be used both to position businesses as far upstream as possible and to focus on the battery streams that matter today and in the years ahead.

Because, as these market signals show, hope is no longer a strategy.