I would leave the insulation out completely. I wouldn’t be surprised if the saltwater has destroyed the insulation.
I would be surprised by that, because EPS is not affected by that at all. Probably the wrong compressive strength was chosen here and the weight of the cars acts too point-loaded.
You don’t just tear insulation away either. That would probably lead to condensation forming on the ceiling in the described basement with corresponding damage potential. So not good advice.
I also think more of a dismantling, putting in XPS, sealing, and load distribution through a screed, slabs, or however.