Integrating circular economy and policy synergies for cost-efficient lithium-ion battery supply chains

The accelerating growth of electric mobility has intensified the need for cleaner and more resource-efficient production systems within lithium-ion battery supply chains. Ensuring sustainability and cost efficiency in these systems is essential to reducing material waste, supply dependency, and environmental pressures across the value chain. This study examines how circular economy practices within the European Union, a region recognized for its leadership in policy innovation and battery manufacturing, shape the cost performance of lithium-ion battery systems. Drawing on longitudinal evidence that captures more than a decade of industrial and regulatory transformation, the analysis applies an integrated framework to explore the interactions among policy measures, technological capabilities, and logistics coordination. To empirically examine these relationships, the study employs a panel dataset covering the European lithium-ion battery supply chain from 2010 to 2023. The analysis combines panel ARDL and nonlinear ARDL (NARDL) models with Necessary Condition Analysis (NCA) and fuzzy-set Qualitative Comparative Analysis (fsQCA) to capture both dynamic effects and configurational pathways influencing cost efficiency in circular battery supply chains. The results show that cost efficiency emerges from the combined influence of recycling performance, government incentives, and coordinated reverse logistics rather than from any single intervention. Strong policy support and efficient recycling infrastructure lead to measurable reductions in production costs and environmental burdens, while fragmented logistics continue to constrain progress. The study offers strategic guidance for policymakers and industry leaders on aligning circular resource recovery with cleaner production objectives, advancing the transition toward low carbon and economically competitive technologies.