Gotcha. For some reason I had a typical basement space in my head while reading.Split level, basement is ground level on the downhill side and back, and only about 3' into the ground on the uphill side and half the front. I'll get some pics.
The split level setup changes the whole scenario.
Definitely needs to be finished space.
Since there's not a moisture issue and no concern of mold if reusing drywall, there's paneling that you can glue up over the drywall in areas like the laundry. That way you don't have to worry about water splashing on the wall and it can be wiped down easily. FRP panels are good. Sherwin Williams Carry's a thin plastic wall panel.
We've used both at work. It's a school and has held up well considering what it endures. Probably last forever in a residential garage or laundry room.