It is well known that the transportation sector is a significant contributor to carbon emissions and environmental degradation, approximately accounting for 8–10% of total emissions [1]. Globally, the United States and China are the two primary emitters of CO₂ from road transportation. In response to the environmental challenges, China has undertaken ambitious initiatives to promote new energy vehicles (NEVs), with a specific focus on electric vehicles (EVs) as a means to achieve carbon peak and carbon neutrality goals ^[2][3][2,3].

With the booming development of the NEV industry, the decommissioning of power batteries is approaching its peak. Generally, EV batteries (EVBs) reach their end of life (EOL) in 5–8 years or when they are reduced to 70–80% of their original capacity [4]. In such circumstances, recycling and echelon utilization of new energy vehicle batteries (NEVBs) have become essential to securing NEV lifecycle low-carbon emissions. Improper disposal of waste EVBs will cause environmental hazards such as heavy metal and electrolyte contamination. Moreover, waste power batteries contain substantial quantities of rare elements such as cobalt, lithium, and nickel, which may face supply shortages in the future. It is indicated that by 2040, recycling copper, lithium, nickel, and cobalt from waste batteries could reduce the demand for primary supply from natural resources by 8% [5]. Consequently, increasing natural resource shortages and stricter environmental regulations have driven the automotive manufacturing industry to focus on closed-loop remanufacturing.

Recycling is a means of green production which provides environmental, economic, and social benefits. Recycling a vehicle reduces greenhouse gas emissions by 545.1–683.1 kg compared to direct production [6]. However, as a core component of NEVs, emissions from the production of power batteries account for about 19–20% t from a purely electric vehicle (PEV). Since the scarcity of electrode materials and the increasing concern of environmental pollution from spent batteries, EVB recycling has become a global issue in the field of NEVs. Therefore, the recycling of retired batteries to achieve zero carbon emission in the lifecycle of NEVs has also become an essential scope of green supply chain management [2]. By 2020, China had accumulated more than 200,000 t of waste EVBs and it is expected to reach 780,000 t by 2025 [7]. However, the global recycling rate of power batteries is less than 5% [8]. To cope with the spent EVBs recycling issue, China has announced a series of policies in line with the practices of the EU, the United States, and Japan. For instance, the ‘Interim Measure for the Administration of Recycling and Utilization of New Energy Vehicles’ Power Batteries’ established the extended producer responsibility (EPR), which requires EV manufacturers to take the responsibility of recycling waste power batteries [9].

However, waste battery recycling still encounters some challenges. On the one hand, there are technical obstacles to EVB recycling. It is still necessary for CLSC enterprises to improve their green investment even though the higher cost of green investment has limited the establishment of formal power battery recycling channels. Therefore, a huge number of spent batteries have gone to informal channels of unqualified enterprises, which brings workers safety and environmental dangers and material waste issues. On the other hand, there is an absence of government incentives for waste battery CLSCs, especially for investment for green technology. Disposal of spent EVBs generates a large amount of greenhouse gases (GHGs) and toxic chemicals, which is contrary to the goal of promoting green and low-carbon NEVs. Therefore, it is necessary to pay attention to green technology investment in CLSCs, and encourage recycling enterprises to actively innovate the green disposal of waste batteries through investment subsidies and carbon emission policies.

2.1. Power Battery Recycling Model

Recovery of used EV batteries has drawn concern from industry to academia in recent years. Current research mainly concentrates on the two aspects of spent power battery disposal modes or recycling channels decision making ^[10][11][13,14]. Power battery recycling refers to the process of recovering and material refining from used or end-of-life batteries that were originally designed to provide power for NEVs. Accordingly, there are two ways to dispose of the collected EOL batteries, i.e., secondary use and rare metal recycling. On the one hand, Harper et al. ^[12][15] points out that refurbishing and reusing used power batteries are more environmentally friendly than recycling as direct reuse can effectively avoid environmental pollution caused by the flow of metals into the soil. Consequently, refurbished battery modules can be used in less demanding applications like short-distance vehicle energy storage when they meet performance requirements ^[13][14][16,17]. Besides this, a few power batteries with a capacity of less than 80% are not suitable for EVs and can still be utilized in energy storage and other fields. On the other hand, the boom of EVs poses severe pressure on the supply of LIBs while recycling of metal materials from spent batteries can alleviate that issue ^[15][18], so it is widely recognized that recycling technology innovations have both economic and environmental benefits ^[16][17][19,20]. Power battery cathodes contain metals such as cobalt, so used batteries that cannot be used in a step-down process need to be collected and dismantled to recover the metals ^[18][21]. Typically, EVB recovery is divided into two stages: pretreatment and metal recovery. In the first stage, the main purpose of pretreatment is to remove inorganic materials from the metal materials to provide more valuable and pure recyclable materials for the next stage of resource recovery ^[19][22]. Metal recycling is the second stage; due to the complexity of the recycling treatment process, the current mainstream metal recycling methods can be divided into pyrometallurgy, hydrometallurgy, and direct recycling ^[19][20][22,23]. In addition, selecting and establishing recycling channels are the research focus of the used EVB recycling CLSC. In this regard, Zhang et al. ^[21][24] discover that the optimal recycling model is the mixed channel where retailers, recyclers, and echelon utilization companies join the reverse supply chain. Yu et al. ^[22][25] propose an alternative recycling model for wasted EV lithium batteries, in which the LIB manufacturers, the EV manufacturers, or a utilization company take responsibility for the collection of used power batteries. The advantage of this model is that it saves transport costs and improves the efficiency of dismantling and recycling lithium batteries, as well as making the dismantling of used batteries safer. Zhao and Ma ^[23][26] discuss EVB recycling CLSC optimal price decisions with the influence of the external environment and coordination contract of battery manufacturers, automobile manufacturers, and recyclers. Sun et al. ^[24][27] introduce the carbon trading and advertising policies for recycling channel selection, which indicate that profits of manufacturers and retailers are positively correlated with the advertising effect. Scholars have also introduced collectors into the examination of reverse supply chains, considering recycling investments and technology levels under a cooperative model consisting of collectors, manufacturers, and recyclers ^[25][26][28,29].

2.2. Research on Government Subsidies for Power Battery Recycling

As the global environmental challenges grow more severe, governments worldwide have been formulating policies aimed at reducing carbon emissions ^[27][30]. Meanwhile, academics have conducted ample studies about the government intervention on EV battery recycling. In terms of EPR mechanism, governments’ dynamic reward–fine policy is more effective in carbon emissions for NEV manufacturers to participate in recycling [7]. Government subsidies to NEV manufacturers have contributed to improving enterprise profits and social benefits when battery suppliers encroach on the recycling channels ^[28][31]. Besides this, various subsidies have also been proposed to incentivize the formation of formal recycle channels and production of recycled materials ^[29][32]. Furthermore, Jiao et al. ^[30][33] reveal that pollution fines and carbon trading costs help carbon emission reduction in power battery recycling enterprises, but subsidies inhibit carbon emission reduction. And due to the learning effect, they can make the power battery recycling enterprises take the initiative to improve R&D investment to reduce emission without regulation. Consequently, with government subsidy policy gradually phasing out, manufactures can also make higher profits by remanufacturing and echelon utilizing spent power batteries [3]. The impacts of the government’s recycling policy such as subsidy ^[31][34], deposit refunding ^[32][35], and punishment in reverse supply chain are examined. The results show that the subsidy policy can promote economic profits and create consumer surplus, and the deposit–refund policy could relieve the government’s fiscal pressure ^[33][36]. Beyond that, blockchain technology is also used to precisely track the lifecycle of retired batteries, deterring unqualified recyclers ^[34][35][37,38]. However, excessive processing fees reduce overall margins, as an alliance model between EV manufacturers and EVB manufacturers would result in overall profit optimization ^[36][39].

2.3. Green CLSC Carbon Policy

With the increasing acclamation of environmental problems and the insight of the carbon emission concept, carbon trading policy has become an important strategy for environmentally sustainable development. Consequently, green CLSC decision making has become a hotspot for academics ^[37][38][39][40,41,42]. Generally, governments impose three types of carbon policies in order to constrain carbon emissions over the lifecycle of production: carbon caps, carbon tax, and cap-and-trade ^[40][43]. In terms of cap-and-trade, Mondal and Giri ^[27][30] examine retailer and manufacturer competition and cooperation in CLSCs. The results indicate that incentive and cap-and-trade policy is beneficial to channel members. In addition, it can also set a reasonable proportion of free carbon quotas and a higher carbon price to mobilize enterprises to reduce emissions ^[41][44]. For example, Jiao, Pan and Li ^[28][31] investigated the carbon trading scheme on the decision of retired EV battery recycling CLSC, which illustrated that higher free carbon quotas discourage recycling and echelon utilization. Zhang et al. ^[42][45] further researched the relationship between competition coefficients, market returns, and low-carbon standards and carbon emission reductions in the NEVB recycling channels. De and Giri ^[26][29] examine carbon reductions in the transportation sector of CLSC, which sheds light on the optimal performance of heterogeneous fleets under different carbon policies.