Based on an evaluation of the current development status of the waste battery recycling industry, this study identifies key challenges, analyzes their underlying causes in depth, and proposes targeted management recommendations. To enhance the accuracy of research findings, the study collected extensive industrial data, including information on the construction and operation of recycling service networks, the approval and implementation of recycling projects, and enterprise compliance reporting. Through comparative data analysis, statistical assessment, and field investigations that supplemented and verified information regarding key operational processes, this study conducted a comprehensive evaluation of the industry′s resource utilization technologies and environmental protection capabilities. The research reveals that the recycling industry currently faces several issues, including an imbalanced industrial chain, inadequate levels of comprehensive utilization, and prominent safety and environmental risks. Specifically, the industrial chain imbalance is reflected in the low operational efficiency of the collection system, significant overcapacity in comprehensive utilization, and a consequent slowdown in the advancement of production technologies. Particularly noteworthy is the inadequate level of comprehensive utilization, characterized by a distinctly fragmented industrial landscape. Over 60% of projects are limited to pretreatment processes such as crushing and screening, failing to achieve the ultimate goal of resource recovery. Moreover, resource regeneration projects primarily focus on metallic resources such as lithium, nickel, and cobalt, with minimal production capacity dedicated to recycling iron phosphate residues and anode materials. The causes of these problems span multiple dimensions, including policy planning, market conditions, and technical standards. First, the lack of proper implementation planning and control for supportive policies has resulted in a surplus of redundant projects and poor coordination with upstream and downstream industries. Second, the lack of mandatory regulations has led to a proliferation of informal operators, causing idle capacity among compliant enterprises while significantly increasing environmental pollution and product safety risks. Third, the technical requirements for standardized processing necessitate substantial investments in production operations and environmental management; the resulting high costs and low returns directly deter companies from expanding advanced production capacity. This insufficient development of advanced production capacity further constrains improvements in the overall level of comprehensive utilization across the industry. Finally, recent market shifts, including the contraction of downstream applications and falling prices of raw materials, have significantly undermined cost-effectiveness and substantially limited market prospects. To establish an efficient collection and standardized disposal system, this study recommends strengthening institutional policy safeguards, developing standardized documentation to regulate recycling practices, vigorously promoting technological research and development, and enhancing full-chain supervision. Specific pathways include reinforcing mandatory recycling systems, formulating technical standards for the battery health assessment, transportation, and storage, and strengthening off-site supervision via material flow tracking, power consumption monitoring, and satellite remote sensing.