With the rapid development of the global electric vehicle (EV) market, substantial quantities of lithium-ion batteries (LIBs) will be retired from electric vehicles. Proper handling of these retired LIBs is becoming an urgent and serious issue. The echelon utilization of retired LIBs is a promising strategy as it maximizes the value of LIBs throughout their entire life cycle, generating economic and environmental benefits. However, echelon utilization of retired LIBs requires taking into account economic, environmental, technical and regulatory perspectives. In this paper, the status, challenges, and techniques of echelon utilization are reviewed. First, the current status, market, policy, and standards of echelon utilization are summarized to illustrate its existing underlying and exposed problems. Secondly, the key technologies of the echelon utilization, including, residual value estimation, sorting, regrouping, and management of LIBs, are introduced. Finally, next-generation technologies for lithium battery echelon utilization are prospected, which may further promote the process and application of large-scale echelon utilization of retired LIBs. • The current situation and prominent issues of echelon utilization are summarized. • The key technologies for echelon utilization are summarized. • The development trends for echelon utilization are discussed.