US Energy Department awards $500M to battery supply chain, with startups turning to defense
The US Department of Energy has granted $500 million to strengthen the domestic battery supply chain, with much of it going to startups that are increasingly finding demand from the defense sector after federal EV incentives were cut.
American battery startups, hurt by the recent rollback of federal EV and battery incentives, are finding new momentum in an unexpected place: defense. Batteries made by these companies now power products ranging from drones and torpedoes to infantry radios and fighter jets.
While the Trump administration has been openly critical of the EV industry, it appears to recognize that batteries remain essential to modern technology and security. On Thursday, the Department of Energy announced $500 million in grants aimed at strengthening the US battery supply chain, reducing reliance on foreign sources and supporting national security.
Startups receive bulk of funding
Most of the money went to smaller battery companies. Coreshell, which makes battery materials, received $50 million to expand manufacturing of its metallurgical silicon anode material. A company spokesperson said defense applications are increasingly part of investor conversations, noting a new investment from ADS Ventures, whose parent company supplies the defense sector.
Lilac Solutions, which extracts lithium from brine, was awarded $100 million to build a processing facility at Utah's Great Salt Lake, targeting production of 5,000 metric tons of lithium carbonate annually by 2028. Nth Cycle received $100 million for a facility that will refine recycled battery material into lithium and nickel compounds usable in new batteries. Its CEO said defense demand is clearly growing, though automotive demand remains significant as well.
Defense still trails automotive demand
Despite the growing defense interest, the sector's battery spending remains far smaller than the automotive industry's. In 2021, the US Defense Logistics Agency spent roughly $200 million annually on batteries, compared to nearly $18 billion expected this year from automakers investing in US battery manufacturing. Observers suggest the new grants may reflect a quiet acknowledgment that recent cuts to EV industry support went further than intended.
