Local Battery Recycling Reshapes US EV Supply Chains

US battery makers are testing on-site recycling to keep lithium at home, cut costs, and steady supply chains as EV demand grows

6 Feb 2026

A quiet shift is taking shape in the US battery business, and it could change how electric vehicles are built. Battery makers and recyclers are taking a hard look at putting recycling plants next to battery factories, folding material recovery into the heart of production.

One early example is a non-binding partnership between Aqua Metals and American Battery Factory. The two companies are studying whether a recycling facility could sit alongside a battery plant in Arizona. There is no deal to build anything yet, but the talks themselves signal a change in thinking. For decades, US battery supply chains have leaned heavily on overseas processing. That model now looks fragile.

The logic behind co-located recycling is simple. Making batteries creates scrap. Today, much of that material is shipped abroad for refining. Recycling it on site or nearby could turn waste into battery-grade lithium that feeds straight back into new cells. Shorter routes mean lower transport costs and fewer points of failure.

Pressure is pushing the idea forward. Demand for lithium and other critical materials is rising with EV adoption. At the same time, imports face geopolitical risk, trade disputes, and long permitting timelines. Industry executives increasingly argue that tighter links between recycling and manufacturing could make domestic supply chains more secure and predictable.

Washington is also nudging the industry in this direction. Recent laws and incentives favor domestic production and recycled content as ways to reduce reliance on foreign suppliers and shrink environmental impact. Not every project will qualify, and the economics vary. Still, local recycling can help companies align with policy goals while backing up sustainability claims.

Recycling, once seen mainly as an end-of-life fix, is starting to look like a strategic input. Recovering materials close to home could soften exposure to price swings and shipping disruptions.

The hurdles are real. Recycling plants are expensive, and large volumes of retired EV batteries are years away. Even so, the trend is clear. As US battery capacity grows, closer coordination between recycling and manufacturing is becoming a potential edge. The Arizona proposal offers a glimpse of how a more self-reliant battery ecosystem might emerge.