<p>In China, the promotion of efficient recycling of retired electric vehicle batteries (EVBs) has emerged as a significant concern. This study employs the system dynamics method to comprehensively analyze the influence of incentive policies, such as recycling subsidies, technological advancement, and carbon trading, on the recycling process of retired EVBs. The findings indicate that providing recycling subsidies can effectively encourage EV manufacturers to expand their recycling capacity and expedite the formal recycling of retired EVBs in the short-term. Notably, a staged subsidy approach proves to be more effective than a fixed-subsidy one. Technological advancement serves as a crucial driver for reducing the costs associated with recovery and cascade utilization, thereby enhancing the economic viability of recycling. Moreover, the carbon trading policy holds the potential to boost the recycling of retired EVBs and cut down carbon emissions. However, under the current situation of relatively low carbon trading prices, its policy impact remains relatively limited. Finally, this study puts forward several recommendations for the design of a policy system conducive to the recycling of retired EVBs.</p>