Conversely, weak regulations in the United States incentivize companies to restrict access to data on battery health and management systems due to intellectual property concerns. IDTechEx's report on second-life batteries in electric vehicles offers a more in-depth analysis of these policy-driven regional differences. However, the collaboration between AI infrastructure company Crusoe and recycler Redwood suggests a potential shift in this trend and the emergence of a new global leader.
Divergent Policies Shaping the Emerging Global Market:
Electric vehicle batteries gradually lose capacity over time due to factors such as charging cycles, natural aging, and thermal stress. When they reach 70% to 80% of their initial capacity (typically after 11–13 years), they no longer meet the requirements for road use, reducing range and peak power, and impacting acceleration and safety. With one in four cars sold in 2025 expected to be electric, there is a critical need to repurpose these still stable, reliable, and high-capacity batteries.
China has taken the lead in this market through policies that improve traceability, strengthen extended producer responsibility (EPR), and prioritize sustainability and safety. These regulations require that at least 60% of waste electric vehicle batteries be allocated to second-life applications rather than being immediately dismantled or melted down.
Although the European Union has established clear frameworks for the dismantling, inspection, and repair of batteries, it lacks incentives or quotas to accelerate their large-scale reuse. Even so, it shows significant momentum with around 20 companies active in battery reuse, providing substantial capacity to manage the growing volume of retired batteries.
In the United States, the implementation of second-life batteries remains more limited due to regulatory, market, and supply challenges. Strict and costly certification requirements, a shortage of available batteries, and a small number of specialized companies are hindering development. Furthermore, the lack of clear federal guidelines, particularly regarding tax incentives, creates uncertainty for investors and developers.
US Companies Drive Largest Global Deployment
Despite these challenges, Redwood and Crusoe have rapidly transformed the market by deploying the world's largest second-life battery system: a 12MW/63MWh solar microgrid in Nevada. In March 2026, they announced an expansion that will increase computing capacity sevenfold and energy storage to 20MW/205MWh.
Since its launch in 2025, this partnership has doubled the capacity of repurposed batteries in the region and supports modular data centers powered by renewable energy, facilitating the growth of sustainable artificial intelligence.
The project has demonstrated exceptional performance, achieving 99.2% availability.
An energy solution for the future?
This raises a key question: can battery repurposing not only improve the sustainability of electric vehicles but also meet the growing energy demand driven by electrification, heat pumps, and the rise of AI data centers?
Author: Joe Carey, Technology Analyst
