Written by Market Lead Eden Yates, Cling Systems
Li-ion batteries becoming "stranded assets" happens more frequently than you think. Valuing batteries is hard and possessing a network to help that process reach a successful conclusion is crucial. This article covers:
Every ramp phase comes with risk, yield learning curves, variable energy prices, fluctuating battery prices, equipment lead times, and customer qualification cycles. There are some excellent resources on these difficulties and how they interact with battery economics. Two examples are:
We don't need to go far to see case studies of companies who tried very hard, but ultimately had to end up in processes including bankruptcies, administration, insolvencies, and liquidation of battery assets. Britishvolt, Northvolt, Arrival, Volta Trucks, Proterra, Lilium, Fisker, and Canoo are some prominent names who encountered difficulties. Tip of the hat though to those women and men who were "actually in the arena... because there is no effort without error and shortcoming" as US President #26 Teddy Roosevelt said.
Difficulties don't just end in the manufacturing process though. Scaling or integration of Battery Energy Storage Systems (BESS) face the similar challenges. Notable examples, some of which are ongoing, are Powin and Flexxgen, ESS Inc (albeit iron flow), and Energy Renaissance in Australia.
If there is surplus inventory, another key factor to be addressed is that there are frequently limitations on who/what to sell it to, with binding restrictions on liability and warranty. A question that deserves its own article is if the use case must correspond totally to the original intended use case, why not create the conditions for that to succeed?
If you’re a founder, CFO, major supplier, or creditor in this space, figuring out a process is a tricky decision. Batteries can have strong similarities with "stranded assets" although that phrase could be extended, to "stranded and depreciating assets" without the right partners or help.
Cells and packs degrade with time and storage conditions; their value depends on numerous factors, not just state of health (SOH), usage history, and provenance. Here is one: how much clarity is there on serial numbers in lists of supply. Does the serial number accurately refer to the actual physical battery? Who is the person who knows that information or "owns" that problem?
Distressed battery assets trade in an illiquid, specialist market with very specific buyers. Various lots typically make their way through the hands of traders, intermediaries, and distributors. Knowing who the technically capable operators are that can finish the process and find the best possible use for this supply is hard. Price is set by factors such as time to safe, productive use, and knowledge of condition. Knowing that the counterparty actually owns or is in possession of the supply is also paramount.
A high level overview is copied below.
And these are just some of the outcomes that people involved in those processes actually want.
Every year a similar pattern takes place: auditors have deadlines for year-end valuations of inventory, Work In Progress (WIP), and assets, and lenders finalizing covenants.
If cash buffers are thin, November–December typically becomes a crucial time to act. That’s when boards either (a) secure bridge funding, (b) enter a structured sale process, or (c) pause and plan an orderly redeployment. Waiting into Q1 often means higher carrying costs, less buyer bandwidth, and steeper discounts, with impairments on the actual supply. Accurately determining what the net realizable value (NRV) is also crucial.
With the right network and a clear bias to outcomes, distressed situations in the battery value chain can end with continuity for customers, some value retention for creditors, and dignity for teams, and that’s the only kind of “win” that matters.
Because battery distress is illiquid by nature, it's crucial that the industry can navigate it with some greater clarity, and not just guesswork.
Cling's network encompasses both the specialist buyer universe and sellers who are preparing to interact with various creditors, receivers, and administrators. Any thoughts, questions, or observations, just let us know.
Thanks for reading.
