January 12, 2026 • 1 min read
Lithium-iron-phosphate battery recycling: Is it profitable?
A look at the economics of lithium-iron-phosphate (LFP) battery recycling
LFP batteries are rapidly gaining global market share, but their lower material value creates a tougher economic case for recycling compared to other chemistries.
As policymakers tighten recycling mandates and manufacturers scale up production, understanding the commercial realities of LFP recycling is critical.
This whitepaper combines insights from CRU’s market analysis with our battery materials and engineering expertise to examine the true economics of recycling for low-cost LFP batteries.
Our key conclusions
- Profitability for European recycling operations is precarious: Feedstock costs (black mass and reagents) and revenue (lithium prices) are the major factors. Technical innovation can mitigate costs and will be the key differentiator in this cost sensitive market.
- Closed-loop models offer the most resilient path: Closed-loop models – where automakers or battery manufacturers supply scrap at no cost – offer greater stability and will become the dominant approach as recycling mandates increase.
- Policy will shape market dynamics: Policy will mandate LFP recycling, and extended producer responsibility regulations will shift the cost of recycling burden onto automakers or battery manufacturers.
- Innovation remains essential: Unless a game-changing technology emerges – one that’s sodium sulphate free and recycles graphite and iron phosphate – the implied added cost to a battery in Europe is roughly USD 3.9 per kilowatt-hour (or USD 273 for a 70-kilowatt-hour electric vehicle battery pack). Because six percent of lithium must be sourced from recycled LFP under the European Union’s 2035 mandates, this reduces the added cost to USD 16 per pack.
Download the full whitepaper
Get the complete analysis, including detailed financial modeling, technology pathways and policy scenarios shaping the future of LFP recycling.
