The rapid growth of electric vehicles(EVs) in China has led to a critical need to recycle and utilize retired power batteries at a large scale. This paper studies the echelon utilization decision of EV power battery manufacturers under the carbon cap-and-trade policy. Two closed-loop supply chain models are constructed for the supply chain comprising a power battery manufacturer, retailer, and echelon utilization enterprise. These models differ based on whether the manufacturer is engaged in utilization business or not. The Stackelberg game theory is employed to solve the models, explore the impact of key parameters on the optimal decision, and conclude the manufacturer's mode selection through theoretical comparison and numerical analysis. The results show that the optimal carbon emission reduction level of the manufacturer increases with the increase of carbon transaction price, and decreases with the increase of carbon emission reduction cost coefficient, and increases with the increase of consumer low-carbon preference coefficient. Establishing an echelon utilization business is not always the best strategy for the manufacturer. They need to meet the following conditions: 1) A higher proportion of echelon utilization; 2) A lower cost invested by the manufacturer to carry out the echelon operation; 3) A higher unit revenue of the manufacturer's echelon utilization with a lower unit revenue of the echelon utilization enterprise.