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Malaysia’s Battery Recycling Industry: A Green Transition with Both Opportunities and Challenges
With the rapid development of the global electric vehicle (EV) industry, batteries, as its core component, are not only driving a low-carbon revolution in the transportation sector but also presenting a significant challenge for large-scale battery decommissioning and disposal in the future.
Against this backdrop, Malaysia stands at a critical juncture in its energy transition, actively developing its EV industry chain while gradually focusing on the “last link” in battery lifecycle management—recycling.
Despite a late start, Malaysia’s battery recycling industry is emerging and demonstrating enormous development potential, thanks to policy guidance, foreign investment, local innovation and the top 10 battery manufacturers in Malaysia.
Policy-Driven Strategic Blueprint
Malaysia’s government has established a clear national framework for green mobility and circular economy development through key initiatives such as the National Automotive Policy 2020 (NAP2020), the Low Carbon Mobility Blueprint (LCMB), and the National Energy Transition Roadmap (NETR). Together, these policies set ambitious targets: EVs should represent 15% of total vehicle sales by 2030, reach 1.5 million units by 2040 (6–7% of total fleet), and achieve 80% market penetration by 2050.
Behind these targets lies a pressing need for robust infrastructure and recycling systems. According to the Malaysia Automotive, Robotics and IoT Institute (MARii), by 2050, approximately 870,000 EV batteries will reach end-of-life.
Without proper management, these lithium-, cobalt-, and nickel-rich batteries pose severe environmental and public health risks. Battery recycling is therefore essential to reduce waste, recover valuable materials, and minimize ecological impact — learn more from the top 10 battery recycling companies in the world that are leading global innovation in this field.
To address this, the government has classified EV batteries as hazardous waste under the Environmental Quality (Scheduled Wastes) Regulations 2005, designated as SW103, requiring licensed treatment and traceability via the Electronic Scheduled Waste Information System (eSWIS). The Department of Environment (DOE) is also developing a technical guideline on e-waste reuse and recycling, expected in 2025, to further strengthen regulatory oversight.
Emerging Industry Ecosystem: Global Expertise Meets Local Innovation
Although Malaysia’s regulatory framework is still evolving, its battery recycling ecosystem is rapidly taking shape — led by international technology providers and supported by domestic players.
Global industry leaders such as SungEel HiTech (Korea) and SK ecoplant’s SK Tes have established licensed recycling facilities in Malaysia, introducing hydrometallurgical recovery technologies that can extract over 90% of valuable metals like lithium, nickel, and cobalt from shredded “black mass.”
The recovered materials meet the purity standards required for new battery production. These investments, combined with over RM 5 billion (≈USD 1.1 billion) in EV-related foreign direct investment, are strengthening Malaysia’s regional role in the EV supply chain, attracting major brands such as Tesla, BYD, and Geely.
Meanwhile, local initiatives are gaining momentum. The Tenaga Nasional Berhad (TNB) is piloting battery second-life projects by integrating retired EV batteries into Battery Energy Storage Systems (BESS), including a 400 MWh demonstration project to stabilize renewable energy grids. Studies indicate that repurposing used batteries in residential solar systems can deliver an ROI above 25%, highlighting the economic viability of this circular model.
In the two-wheeler sector, Blueshark is pioneering a Battery-as-a-Service (BaaS) model. Its “BlueStation” swap stations, deployed at petrol stations and convenience hubs, enable centralized battery management, real-time monitoring, and traceable recycling.
Similarly, TYCORUN Battery Swap is deeply involved in building a comprehensive battery-swapping ecosystem. Through its intelligent swap cabinet network and full-lifecycle battery management platform, it covers a wide range of urban mobility scenarios. Both companies have established an integrated “use–recycle” model that effectively solves the challenges of decentralized battery collection.
Economic Potential: Green Growth and Job Creation
Battery recycling is not only an environmental issue, but also an “urban mining” operation with enormous economic value. It is estimated that waste lithium batteries contain 5%-20% cobalt and 5%-7% lithium, far exceeding the grade of natural ore. Recycling and manufacturing new batteries can save up to 40% in costs and reduce reliance on raw material mining by 51.3%.
Globally, the electric vehicle battery recycling market is projected to reach $6.5 billion by 2030. In Malaysia, the market is expected to grow at an average annual rate of 5.28% from 2022 to 2027. More importantly, this emerging industry is expected to create 30,000 to 50,000 high-skilled jobs over the next decade, covering fields such as chemical engineering, data analytics, smart manufacturing, and environmental science, injecting new momentum into the country’s economic restructuring and upgrading.
Furthermore, a robust recycling system helps enhance Malaysia’s attractiveness as a green investment destination. By establishing a localized secondary resource supply network, the country can strengthen its supply chain resilience, reduce dependence on imports, and align with its long-term climate goal of net-zero emissions, even in the absence of upstream mineral resources such as lithium, cobalt, and nickel.
Key Challenges that Cannot Be Ignored
Despite the promising outlook, Malaysia’s battery recycling industry still faces multiple structural challenges.
Infrastructure Development Lags Behind
Taking charging networks as an example, the “Low-Carbon Transportation Blueprint” set a target of building 10,000 public charging piles by 2025, but by the end of 2024, only about 3,354 had been completed, a completion rate of less than 34%. The lack of charging convenience directly affects consumers’ willingness to purchase vehicles, thereby delaying the pace of battery retirement and leading to unstable supply of recycled materials.
Shortage of Skilled Professionals and Technological Barriers
Electric vehicle batteries have complex structures, involving high-voltage electrical systems and various chemical systems (such as NCM and LFP), and their dismantling, testing, and reuse require highly specialized knowledge. Currently, Malaysia suffers from a severe shortage of engineers and technicians familiar with this field, making it difficult to support large-scale recycling operations. As experts have stated, “This is not a problem that can be solved by searching online.”
Fragile Profit Model
Current mainstream hydrometallurgical processes require large upfront investments and high chemical costs, necessitating a certain processing scale to achieve break-even (studies show an annual processing capacity of 17,000 tons). Furthermore, recycling revenue is highly dependent on fluctuations in international commodity prices, especially cobalt prices. However, as the industry shifts towards low-cobalt or lithium iron phosphate (LFP) batteries, the traditional recycling economic model is being challenged. Recent declines in global mineral prices have already led some recycling companies into losses.
Lack of Standards and Regulatory Enforcement Challenges
Currently, battery design lacks unified standards, and batteries of different brands and models vary significantly in size, voltage, and packaging methods, greatly increasing the difficulty of automated sorting and processing. Furthermore, illegal dumping and unauthorized dismantling persist. Although the Ministry of Environment, in conjunction with customs, port authorities, and other departments, has strengthened enforcement, cross-departmental collaboration and grassroots implementation still need improvement.
Future Outlook: Building a Sustainable Battery Recycling Ecosystem
Facing both opportunities and challenges, Malaysia has the potential to play a significant role in the battery recycling sector and build a sustainable battery recycling ecosystem. Achieving this goal requires collaborative efforts from multiple parties :
Conclusion
Malaysia is currently at a historic juncture in developing electric vehicles and related industries. While battery recycling is still in its early stages, it carries multiple responsibilities, including environmental protection, resource security, and economic growth.
Facing these challenges, only through policy coordination, technological innovation, and multi-party cooperation can waste batteries be transformed into true “urban mines,” achieving a leap from a linear economy to a circular economy.
This not only concerns a country’s level of green development but also determines its competitiveness and influence in the global new energy landscape. The next decade will be a crucial period for Malaysia to build a complete battery value chain and a significant opportunity to achieve sustainable prosperity.