Computers have psyched us out. There is no other technology in human history that has ever seen a capability growth curve like Moore's Law. Even aviation, which went from biplanes to moon landings in 50 years, doesn't compare.

Still, there has been huge improvement in batteries. The main improvement has not been in energy density but in cost. Find some graphs of battery cost per kWh of storage. Storage cost has dropped by almost 10X in the last 15-20 years. Reliability and rapid recharge capability have also increased a lot.

Still, for medium to long haul aviation we probably would need at least a 3-4X improvement in energy density per unit volume and mass, and I don't see that happening soon. It's likely that long range aviation is stuck with liquid fuels for the foreseeable future. But as I said it's only 7% of oil consumption. We should just let aviation keep going as-is and cut fossil fuel use in terrestrial transport and power generation.

Part of why we're not recycling batteries much is that lithium isn't expensive enough to make the investment in it profitable. The major cost in batteries is the manufacturing process, not the lithium itself. If lithium prices go up there'd be an incentive to figure out recycling.