End-of-life vehicles (ELVs) present both opportunities and challenges for the environment and the economy, where effective recycling management plays a decisive role. Recently, the primary focus of recycling management has shifted from simply meeting demand to refining and optimizing processes at the city-scale. However, the mismatch in recycling capacity has become a significant obstacle to maximizing environmental and economic benefits. To reveal this issue and propose improvements in the context of China, this study simulates end-of-life internal combustion engine vehicles (ICEVs) and new energy vehicles (NEVs) at the city-scale from 2021 to 2050, and analyzes their spatio-temporal pattern and recycling capacity matching. The results indicate that the number of ELVs in China will continue to increase, peaking between 3.5 and 3.7 million. This growth will be mainly driven by third- to fifth-tier cities, as well as central and southwestern cities. Regarding recycling capacity matching, most cities possess excess dismantling capacity, while first-tier cities face coordination problems in battery collection. Spatial coordination across cities or provinces is a viable approach for dismantling enterprises and should be prioritized over indiscriminate deregistration or establishing new facilities. The absence of initiative within the recycling system results in uncoordinated battery collection. Implementing a recycling-sharing mechanism and establishing a reuse market can effectively tackle this problem by leveraging market incentives. These analyses provide practical suggestions to maximize the environmental and economic benefits of resource recycling, thereby contributing to the UN’s 2030 Sustainable Development Goals (SDGs).