The North American battery recycling sector built capacity for a wave of feedstock that has not arrived yet. The bankruptcies, grant cancellations, and layoffs accumulating across the industry this year and last suggest the gap between investor expectations and market reality is proving costly.
Ascend Elements is the most recent example of such disconnect in the sector. The company filed for Chapter 11 protection on April 9, 2026 in the U.S. Bankruptcy Court for the Southern District of Texas. It had raised substantial capital to build domestic battery materials infrastructure, but project timelines slipped and financing conditions tightened.
The signs had been visible for more than a year. In early 2025, Ascend and the U.S. Department of Energy agreed to cancel a $164 million grant tied to cathode active material production at its Kentucky facility. A separate $316 million DOE grant tied to the same facility was subsequently cancelled in the lead-up to the filing.
Ascend is not the first. Li-Cycle entered creditor protection in Canada and the United States in May 2025 after cost overruns and operational failures, despite securing a $475 million DOE loan commitment that it was ultimately unable to draw down.
The structural problem behind both cases is feedstock timing. The International Energy Agency has reported that most battery recycling input today comes from manufacturing scrap rather than end-of-life batteries, with scrap expected to account for roughly two-thirds of available feedstock through 2030. A 2025 Royal Society of Chemistry study puts the horizon further out: electric vehicle batteries typically last 12 to 15 years, meaning retired EV packs do not become a dominant waste stream until after 2040. Companies that built large-scale plants ahead of that curve are now running on manufacturing scrap and consumer electronics batteries, streams that are smaller, less consistent, and more competitive to source.
Commodity exposure adds enormous pressure. Recycling revenues depend partly on recovered lithium, nickel, and cobalt prices, all of which move with global markets. A 2025 Nature Communications analysis described lithium-ion battery recycling as constrained by technical, economic, and regulatory challenges, with global recycling rates still well below those of more established systems such as lead-acid batteries.
To make things worse, policy uncertainty has compounded the difficulty. Federal grant cancellations and program reviews have removed funding that many business plans depended on. Uneven EV uptake and shifting automaker production plans have pushed back projections for future battery volumes. SK Battery America, a unit of SK Group, cut nearly 1,000 jobs in Georgia in 2026 amid those conditions, the Associated Press reported.
However, it is important to note that not every operator is in distress. Redwood Materials reported in late 2025 that the first phase of its South Carolina facility added an initial 20,000 metric tons of annual processing capacity. The divergence points to a sector sorting itself into operators whose capital structure and feedstock access can sustain the wait, and those that cannot.
For the recycling industry stakeholders, instability carries practical consequences. Lithium-ion batteries run through the device waste stream, and consolidation or failure among battery recyclers affects processing options, pricing, and compliance logistics. Those downstream relationships will matter more as the sector contracts.
All in all though, the long-term case for battery recycling, tied to electrification and critical materials security, has not changed. The near-term business of it remains harder than the capital raised between 2021 and 2024 suggested.
