<p>The recycling and reuse of retired power batteries is crucial to environmental protection and resource conservation. Clarifying the functional mechanisms among power battery reverse supply chain stakeholders is crucial for system coordination and sustainable development. Therefore, it is necessary to construct a game model among the government, recyclers, and cascade utilization enterprises to study the impact of relevant parameters on the decision-making of subject. The results show that the reward and punishment behavior of the government can achieve the incentive effect. However, the time-lag of punitive measures may dampen enterprises’ enthusiasm, and subsidies should be within the government’s affordable range. The higher the environmental cost of non-compliant recycling enterprises borne by the government, the slower the initiative of regulation, but the government will still carry out proactive regulation. “Non-compliant” recyclers can negatively affect “innovative” cascade utilization enterprises. Hence, the government should rationally apply reward and punishment measures, improve the access system, strengthen the traceability system, establish an information-sharing platform, ensure the standardized and transparent operation of the recycling supply chain, and address the challenges in the recycling management of retired power batteries.</p> Graphical Abstract <p></p>