Rising Costs and Tariffs Lead to Closure of American Energy Storage Innovations and Li-Cycle’s Bankruptcy Filing

American Energy Storage Innovations (AESI) and Li-Cycle Face Business Challenges

Details have emerged regarding the closure of American Energy Storage Innovations (AESI), a US-based battery energy storage system (BESS) firm. Meanwhile, battery recycler Li-Cycle has filed for Chapter 15 bankruptcy and has been ordered to cease trading on the stock market. While these two companies operate in different segments of the battery and BESS value chain, their struggles highlight significant challenges within the US battery ecosystem, particularly due to rising costs, tariffs, and the impact of overseas production.

### AESI’s Voluntary Wind-Down

As reported exclusively by Energy-Storage.news, AESI has decided to wind down its operations. All employee contracts were terminated before a General Assignment for the Benefit of Creditors was executed on May 12. The decision to close was influenced by increasing material costs, tariffs, and the company’s reliance on overseas production, primarily in China and Malaysia. Despite its name, CEO Bud Collins emphasized in a previous interview that manufacturing in China was the only economically viable option for the company’s products.

The board opted for liquidation to maximize recoveries for creditors. Physical assets are being liquidated, while the company is also in the process of selling its intellectual property (IP) and business pipeline assets. These include its IP and components, as well as algorithms related to energy management systems (EMS), battery management systems (BMS), and state of charge/state of health/state of balance (SOC/SOH/SOB) calculations.

AESI claims to have a sales pipeline exceeding $18 billion, with committed orders of $93 million and high-probability orders amounting to $306 million. Last year, it announced 1.5 GW of letters of intent with utility firm ESB for projects in Scotland, although it is unclear how this fits into its current pipeline. The company has secured 4 GWh of manufacturing capacity in Suzhou, China, and planned to double that capacity in Malaysia by early 2026.

### Li-Cycle’s Chapter 15 Bankruptcy Protection

In a separate development, North American battery recycling firm Li-Cycle has filed for Chapter 15 bankruptcy protection in the United States and received a cease trade order (CTO) from the Ontario Securities Commission (OSC), where it is publicly listed. The Chapter 15 process, which began in mid-May, protects the company from creditor claims while it seeks a buyer for its assets through a court-supervised sale and investment solicitation process.

On May 1, Li-Cycle announced plans to sell its assets and acknowledged that it required additional financing to meet obligations and repay liabilities from regular business operations. The company warned that, given its current circumstances, it might have to significantly modify or terminate its operations or potentially dissolve and liquidate its assets under insolvency laws.

Li-Cycle’s troubles began in late 2023 when it announced a pause in construction on its primary recycling hub in New York due to soaring costs. Although it continues to generate revenue from its ‘spoke’ black mass production facilities, with $28 million in revenue in 2024, this has not been sufficient to maintain ongoing operations. The CTO from the OSC was issued due to the company’s failure to file required periodic disclosures in compliance with stock market regulations.

One source noted that a significant mistake made by Li-Cycle was its choice to pursue proprietary battery recycling technology, rather than utilizing more accessible off-the-shelf options, which contributed to the escalating costs associated with the New York hub.

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The challenges faced by AESI and Li-Cycle serve as a stark reminder of the pressures within the US battery industry, particularly in light of rising costs and shifting policies.