The reuse pivot, the recycling stumble, and what the data actually says

Two stories ran through US battery industry news this past month. Ascend Elements filed for Chapter 11 on 9 April, having raised over a billion dollars in equity and grants since 2015. Three weeks later, battery repurposing specialist Moment Energy closed a $40 million Series B, bringing its total raised to over $100 million and confirming that capital is now flowing into battery repurposing at a scale once reserved for recycling. Redwood Materials sits between the two narratives: laying off staff on the recycling side while expanding Redwood Energy, its repurposing division, with supply agreements to Rivian and Crusoe.

It is tempting to read these events as a clean reversal — recycling overbuilt, repurposing finally vindicated. That reading is too easy. The actual story is more interesting and has bigger implications for anyone trying to assess where end-of-life battery value will be created over the next two decades.

This matters beyond the obvious audience. Investors and reuse companies are looking at this market because it's where they make their money. But the reuse and repurposing market is also what determines whether end-of-life vehicles stay in the US and Europe or get exported. It is what allows a PRO to charge less and still cover costs. It is what lets an OEM turn producer responsibility from a cost line into a value source. And it is what creates the conditions — feedstock, volumes, regional retention — under which recyclers can eventually scale. The recycling floor, in turn, sets the risk profile that anyone taking over producer responsibility has to model. These are not separate markets. They are the same market viewed from different positions, and a decision made in one of them changes the economics of all the others.

What the recycling distress actually means

CES has been arguing for several years that Western recycling capacity was built ahead not just of feedstock, but ahead of the downstream customers — pCAM producers, cathode makers, cell manufacturers — who would consume the recovered materials.

Just as in Europe, the collective fixed-cost base of US pre-processing capacity now exceeds what the available feedstock can support at sustainable utilisation. That fixed-cost overhang takes years to unwind regardless of how quickly the underlying market grows. Operators are paying for capacity built in 2022-2024 against a market trajectory that is now several years further out than expected.

Redwood's recycling-side layoffs reflect the same constraint. The company has not been expanding material recovery capacity at the pace once implied, because feedstock at the price it can afford to pay simply is not yet available — and the economics do not justify recovering material that needs to be exported anyway given the limited downstream pull in the US.

Where the capital is going instead

Repurposing has emerged as the higher-value destination for US capital interested in the EV battery secondary market. The fundamentals supporting this are real and structural, not narrative.

The Investment Tax Credit at 30%, with the 10% domestic content adder if made in the US, materially improves project economics for second-life energy storage systems. Combined with tariffs on Chinese-manufactured cells and ESS, this creates a window of demand for domestically built storage that genuinely favours repurposing. The AI-driven data centre power demand — with its requirement for both strong baseline and variable supply — is the marginal buyer pulling that demand forward.

Moment Energy's positioning around data centre customers is well-aligned with where the most acute demand is emerging. B2U Storage Solutions has operated grid-connected second-life storage in California for several years and closed a $45M structured fund in 2025 to finance new projects. Redwood Energy has signed supply agreements with Rivian for refurbished pack feedstock and with Crusoe for AI data centre installations.

Repurposing sits higher in the value stack than recycling. The shift in capital direction is consistent with that hierarchy, and it is broadly the right direction of travel.

But this is also where the simple narratives become dangerous

If the lesson of the recycling distress is that capacity built ahead of feedstock and downstream demand will fail, the same lesson applies to repurposing. Capital scaling ahead of what the market can actually deliver is precisely the trap the industry has just walked out of on the recycling side. To avoid walking back into it on the reuse side, the analysis needs to start with what the underlying cohort actually generates — and to whom. This is the kind of analysis the CES Used Battery Value Forecast was built for. Below is one application.

Last quarter, 31,436 Tesla Model Y Premium AWD vehicles were sold on the US market. These NCA batteries — the most common single configuration of US EV sales today — represent 2.36 GWh of energy placed on the market. From here also starts the secondary market.

CHART 1: Tesla Model Y cohort lifetime value by pathway and geography

Across the full 25-year lifetime of this cohort, these batteries will generate approximately $44 million in end-of-life resale value, distributed across reuse, repurposing, and recycling. Of that total, $33 million (75%) is captured in the US; the remaining 25% follows exported vehicles into other markets.

CHART 2: Where the value lands — US-captured vs Overseas-captured

The pathway distribution shows recycling as the largest single category by value share — 53% of US-captured cohort value, or $15.5M. Reuse and repurposing together account for $17.6M, or 47%. These shares are real, but they obscure two more important points.

First, reuse and repurposing happen earlier. Looking at chart 1, the value generation window for direct reuse and repurposing peaks in 2034-2038. The recycling tail extends through the late 2040s as the bulk of the cohort reaches genuine end-of-life. Capital deployed today for reuse activity sees returns within a decade; capital deployed for recycling against a 2026 cohort waits twenty years.

Second, the charts show only the first end-of-life route. A pack repurposed in 2034 is still alive in 2050 and will eventually be recycled. That downstream recycling — and the materials it returns — is not in the chart. Reuse and repurposing don't compete with recycling; they precede it. Every battery will be recycled eventually. The question is what happens before that and who captures the value in the interval.

The value beyond the resale moment

The end-of-life resale value is what changes hands when the producer responsibility window closes. It is not what the battery generates in operation thereafter. Across its second life, the same Tesla cohort generates significantly more value as an operational grid asset than it does at the resale moment.

CHART 3: Second-life revenue vs battery resale value, cumulative

Applying conservative revenue assumptions — $50/kWh/year for utility-scale ESS in ERCOT-style merchant markets, $35/kWh/year for commercial peak shaving, $20/kWh/year for demand response — the cohort's repurposed packs generate between $76 million and $191 million of grid services revenue through 2050. Three to five times the entire cohort's end-of-life resale value.

This revenue accrues to whoever owns the pack during its second life. The original battery owner is paid once at handoff; the second-life operator captures the ongoing value. The economic implications for how producer responsibility, contract design, and ownership models should be structured are direct.

Scaled to the full US 2026 EV cohort — roughly 865,000 vehicles if Q1 sales annualise — these numbers move into the billions. Approximately $1.2 billion of end-of-life resale value across the cohort lifetime, $2-5 billion of additional second-life revenue from the repurposed share. The new EV market that put these batteries on the road is itself approximately $44 billion. The end-of-life value is roughly 3% of the original purchase, but the second-life revenue captured downstream is 5-12% — a meaningful component of the asset's lifetime economics, and one that flows to whoever owns the pack after first life ends.

It is also worth noting that if we had annualised Q1 2025 instead, the cohort value would have been 37% higher. The underlying US EV market is moving in the wrong direction. This is the structural problem behind every analysis of the US battery secondary market today: the cohort being placed on the market each year is meaningful, but its trajectory is downwards rather than upwards.

Every battery placed on the US market in Q1 2026 will generate roughly $1,400 in end-of-life value, and three to five times that in second-life operational revenue downstream. Most of the decisions being made about these batteries right now ignore both numbers.

Why the simple narratives are wrong

That said, the US market remains significant in absolute terms, and the supply will arrive on a timeline that is more predictable than most other parts of the energy transition. Batteries placed on the market in 2026 will reach end-of-life largely between 2034 and 2046. The volumes are mostly already determined. This predictability is what makes the analytical case interesting, and it is also what makes the simple narratives dangerous — because they look superficially supported by the volume curve while being wrong about what actually drives the market.

Three narratives are circulating in the press and in capital allocation conversations. Each is more misleading than the previous.

The first mirrors the old recycling-technology narratives — that the technology or efficient methods to reuse batteries have not been in place, and that this is why packs have ended up in recycling or, in the worst telling, landfill. This is far from true. Both the US and Europe are home to a substantial number of successful repurposing companies and installations. What has been lacking are fast-growing volumes of end-of-life batteries outside of recalls and warranty returns. And alongside that, an immature reuse-side market where, in particular, car dismantlers have not yet found the right model for how to sell batteries pulled from end-of-life vehicles — leaving prices in a range that has not unlocked repurposing demand.

The second is that used batteries are inherently better than new for energy storage. They can be, when economics align, but they often are not. About half the second-life companies we have worked with over the years end up as ordinary energy storage companies running on overstock and new batteries — at which point they compete on price and delivery against established players. The structural reality is that whoever uses the battery downstream is buying cost-competitive function. There is generally nothing inherently better about a second-life battery other than its price. That means repurposing companies positioning themselves around specific ESS applications will inevitably also use new batteries when those are cheaper, because their value creation is downstream of the actual repurposing. The second-life business that survives is one tied to upstream supply, helping its customers capture value from batteries they already own or are responsible for.

The third is that ESS demand growth — particularly from AI data centres — will pull second-life batteries forward. This skips far too many analytical steps. AI data centre demand is real and growing, but it generates demand across the entire battery market, not specifically for second-life batteries. The most likely path for repurposed batteries is into segments that have historically not been served well — smaller commercial applications, off-grid systems, long-duration energy storage, and behind-the-meter installations at generation sites — segments where new batteries struggle to compete on cost. The headline of "AI demand pulls in used batteries" is too broad to be useful for planning.

The dynamics that matter

End-of-life battery markets are not a fixed quantity to be allocated. They are a dynamic system where the actions of major players reshape the streams. Car dismantlers sit on a particularly interesting opportunity here. The price at which a 7-year-old EV battery can be sold for replacement determines whether a substantial replacement market actually emerges. Too high, and replacement only happens for need-to-change cases — true battery failures. Too low, and the dismantler cannot bid competitively for end-of-life vehicles, which then export instead.

The sweet spot — where replacement becomes a nice-to-change consideration alongside need-to-change — is what creates the replacement market that currently barely exists. Our forecasts point to roughly 40% of EVs placed on the US market ultimately being exported, and the battery follows the vehicle. Whether that share rises or falls depends partly on what battery prices do at the dismantler tier.

Lower battery prices help repurposing companies buy packs at levels compatible with new LFP. They simultaneously squeeze what auto salvage operators can earn from EV vehicles. These are not separate markets; they are linked by the same underlying asset.

This dynamic also reaches into export markets. Used vehicles exported whole serve markets — Ukraine, the Middle East, and increasingly parts of Africa and South America — that need cheap personal transport, not strategic battery feedstock. The economics that drive vehicle export work against domestic battery feedstock supply, regardless of whether US-based repurposing companies build factories or not.

What this means for different participants

For OEMs and battery placers under producer responsibility frameworks: the reuse and repurposing market is large and important, and the cohorts placed on the market today will generate significant value across their lifetimes. By default, OEMs have no stake in that value beyond the resale moment. Whether they should — by retaining ownership, by structuring transfer agreements, by partnering with downstream operators — is fundamentally a question of their own value creation strategy. The decision sits alongside decisions on how to engage PROs and stewardship schemes, how to structure financial provisions, and how to incentivise partners to actually create maximum value in the secondary phase. These are not separate decisions; they reinforce or undermine each other.

For reuse and repurposing companies: beyond driving demand for their products, the strategic priority is partnerships with car dismantlers, ESS integrators, and other companies through which batteries will flow. The goal is sustainable volumes at the right price. The industry needs to unlock standstill situations — where no party wants to lose value, but inaction leaves no value created at all. It also needs to create markets that do not currently consume batteries: smaller, decentralised, lower-revenue applications where the cost differential against new batteries actually matters and where repurposed packs can credibly serve.

For recyclers: the path forward is feedstock at scale, downstream demand for recovered material, and cost structures that survive without subsidy. None of these is fully present in the US — just as it is not yet in Europe either. The collective fixed-cost overhang will take years to work through. Survivors are likely to be those positioned to grow with available feedstock rather than those built for a market that exists in a forecast. The strategic implication is the same as the one we have been making for years: upstream value capture is the most reliable way to secure feedstock for recycling. Companies that build credible positions in reuse, repurposing, or pack-level services will source feedstock more securely than those that rely on spot market acquisitions.

For investors: the capital flowing to repurposing reflects a genuine value opportunity. The risk is that business models scale ahead of feedstock availability — the same structural problem that caught Ascend, Li-Cycle, and several other recyclers. The right assessment is not the headline TAM but how individual companies' growth trajectories align with actual battery returns. Companies that have credible plans for either generating value with lower-than-forecast feedstock volumes, or for growing through complementary solutions when feedstock is constrained, will weather what is coming. Those whose financial assumptions require feedstock to arrive at the forecast TAM rate will not.

For policymakers: the system is more dynamic than usually modelled. Producer responsibility frameworks designed around fixed assumptions about pathway distribution will misallocate value. Frameworks that recognise the cohort can generate value through multiple sequential routes — first reuse, then repurposing, then recycling, across different geographies — will perform better.

What CES is publishing, and where we are taking this conversation

Every claim in this newsletter — pathway distribution, value timing, export share, second-life revenue, US-vs-overseas capture — comes from a single underlying analytical system. CES has spent ten years building the lifecycle, trade, and pricing data that makes battery secondary market forecasting possible at the level of specific cohorts, chemistries, geographies, and pathways. The Tesla Model Y analysis above is one example.

We have three current data products that operationalise this work:

CES Online — Subscription access to the CES Used Battery Value Forecast and the underlying data infrastructure: pricing, volumes, lifecycle, materials, market intelligence. From £250/month or £3,000/year. Subscribe now.

CES Battery Portfolio Forecast — Bespoke forecasts calibrated to your specific battery portfolio — owned, manufactured, or under producer responsibility — integrating CES market data with your placed-on-market volumes, geographies, and chemistries. Quarterly, bi-annual, or annual delivery.

CES Battery Market Forecast  — Dollar-denominated forecasts of the secondary battery market by chemistry, geography, and pathway.

We are taking this full conversation into the room at The Battery Value Equation in London on 2 June. The day brings together senior figures from across the value chain — Hydrovolt, CRU, Connected Energy, Allye Energy — together with participants from OEMs, ESS operators, recyclers, reuse companies, financial institutions, and policymakers. The discussion is structured around exactly the dynamics in this newsletter: how the various players should act so the market grows faster and becomes more attractive for everyone in it. Register here.

Methodology note on the Tesla cohort analysis: 31,436 Tesla Model Y Premium AWD vehicles, Q1 2026 US sales (40% of total Model Y Q1 sales). Pack: 75 kWh, NCA cells. End-of-life distribution from CES Battery Volume Database, ages 1-25. Pathway shares and resale values from the CES Used Battery Value Forecast. Recycling floor reflects current European pre-processing economics with utilisation rising from 30% in 2026 to 90% from 2035. Cell-level material recovery only; pack-level non-cell recoverables not included. Second-life revenue assumes linear capacity derate from 90% to 30% over up to 25 years, capped at calendar year 2050. Per-kWh revenue assumptions held flat at conservative current-market levels.