The energy transition relies heavily on lithium‐ion batteries (LIBs), which are crucial for electrifying transportation and supporting renewable energy integration. However, the concentration of LIB production in China and other countries poses supply chain risks for the European Union. To mitigate these risks, the EU has introduced circularity targets as part of the 2023 Battery Directive. Despite the growing focus on these targets, significant knowledge gaps remain regarding their feasibility and the comprehensive tracking of other strategic materials. This study addresses these challenges and forecasts the circularity of critical raw materials in European EV batteries by 2040. Following a detailed review of LIB recycling processes and Europe’s recycling capacities, the study performs a bottom‐up assessment of material recovery efforts, evaluating the feasibility of meeting the EU’s circularity targets.