On the basis of a review of existing life cycle assessment studies on lithium‐ion battery recycling, we parametrize process models of state‐of‐the‐art pyrometallurgical and hydrometallurgical recycling, enabling their application to different cell chemistries, including beyond‐lithium batteries such as sodium‐ion batteries. These processes are used as benchmark for evaluating an advanced hydrometallurgical recycling process, which is modeled on the basis of primary data obtained from a recycling company, quantifying the potential reduction of environmental impacts that can be achieved by the recycling of different cell chemistries. Depending on the cell chemistry, recycling can reduce significantly the potential environmental impacts of battery production. The highest benefit is obtained via advanced hydrometallurgical treatment for lithium nickel manganese cobalt oxide and lithium nickel cobalt aluminum oxide‐type batteries, mainly because of the recovery of cobalt and nickel. Especially under resource depletion aspects, recycling of these cells can reduce their impact to an extent that even leads to a lower “net impact” than that of cells made from majorly abundant and cheap materials like lithium iron phosphate, which shows a more favorable performance when recycling is disregarded. For these cells, recycling does not necessarily provide benefits but can rather cause additional environmental impacts. This indicates that maximum material recovery might not always be favorable under environmental aspects and that, especially for the final hydrometallurgical treatment, the process would need to be adapted to the specific cell chemistry, if one wants to obtain maximum environmental benefit.

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This article provides an outline of the currently existing and possible future recycling pathways for end‐of‐life lithium‐ion batteries and corresponding current industry activities. Beginning with an outlook onto current and possible future demand for lithium batteries and corresponding resource limitations, it addresses the current state of the art in lithium‐ion battery recycling and its role for a future circular battery economy. Apart from a detailed description of the different available recycling processes and their technological assessment, it also provides details about potential environmental benefits and limitations. Technological challenges and potentials are discussed together with other aspects related to environment, economy, legislation and future developments, providing thus a comprehensive summary of all relevant aspects in the field.