Defense Powers Up US Battery Startups

U.S. battery startups are increasingly turning to the defense industry for support, a shift occurring after federal incentives for electric vehicles were altered. This pivot is providing a vital lifeline as companies seek to power a range of defense equipment, from drones to infantry radios.

The Department of Energy announced a $500 million grant program aimed at strengthening the domestic battery supply chain. This initiative seeks to reduce reliance on foreign sources and enhance national security, with many startups benefiting from the funding. For example, Coreshell received $50 million to expand its manufacturing of metallurgical silicon anode material.

Other companies are also securing substantial grants. Lilac Solutions was awarded $100 million to establish a lithium carbonate processing facility in Utah, expected to produce 5,000 metric tons annually by 2028. Nth Cycle also received $100 million to construct a facility for refining black mass from recycled batteries, yielding essential lithium and nickel compounds for new production.

While the automotive sector continues its long-term investment in battery manufacturing, estimated to reach nearly $18 billion in the U.S. this year, defense demand is described as a clear and immediate driver for battery companies. Even as recently as 2021, the U.S. Defense Logistics Agency was purchasing $200 million worth of batteries annually, highlighting the sector's significance.