<p>As the world’s leading EV market, China faces escalating challenges from surging LIB demand and the impending wave of spent batteries. Against the backdrop of carbon neutrality goals and the rapid expansion of electric vehicle (EV) adoption, this study aims to examine how circular economy (CE) principles can be effectively integrated into lithium-ion battery (LIB) recycling in China, with the objective of supporting environmentally sound end-of-life management and resource security. This research systematically applies an economic assessment of key metals in lithium batteries and develops guidance for selecting appropriate business recycling models based on metal value structures. Based on the CE framework, this work introduced a composite model “metal economic threshold analysis + SWOT-based recycling model evaluation + CE strategic alignment” as the main methodological approach to assess the economic feasibility of battery metal recovery. By integrating metal composition data with strategic model matching, the study identified critical value thresholds for key metals. A comparative SWOT analysis of China’s major lithium battery recycling models was conducted to evaluate their alignment with both economic and CE objectives. In addition, a multi-dimensional radar analysis was conducted on six leading Chinese battery recycling enterprises, using publicly available data to empirically validate the proposed framework. The results indicate that recycling strategies and business model suitability are strongly dependent on battery metal value structures, providing semi-quantitative references for enterprises to select appropriate recycling strategies. Moreover, the findings offer practical insights for industrial optimization and strategic decision-making in advancing a circular economy for lithium batteries.</p> Graphical abstract