The Department of Energy announced Thursday it is awarding $500 million in grants to strengthen the battery supply chain in the United States, with much of the funding going to startups. The program aims to reduce dependence on foreign sources, strengthen national security, and advance American energy dominance, according to TechCrunch. The announcement comes as U.S. battery companies have turned to defense applications — powering drones, torpedoes, infantry radios, and fighter jets — after the One Big Beautiful Bill eliminated battery and EV incentives earlier this year.
Coreshell, a battery materials startup, received a $50 million award to expand manufacturing for its metallurgical silicon anode material. Lilac Solutions, which extracts lithium from brines, landed $100 million to build a processing facility on Utah's Great Salt Lake that will produce 5,000 metric tons of lithium carbonate annually by 2028. Nth Cycle told TechCrunch it received $100 million to build a facility that will refine black mass from recycled lithium-ion batteries, producing lithium and nickel compounds for new batteries. Even before these grants, the U.S. Defense Logistics Agency was purchasing $200 million worth of batteries annually as of 2021. This year, the automotive industry is expected to spend nearly $18 billion on battery manufacturing in the U.S. alone, according to Mordor Intelligence.
"We're seeing clear demand drivers from the defense sector," Megan O'Connor, co-founder and CEO of Nth Cycle, told TechCrunch. "But there's still that in the automotive space as well." A spokesperson for Coreshell confirmed that defense applications of lithium-ion batteries are "absolutely playing out in discussions." The company recently brought on ADS Ventures as an investor; the strategic VC's parent company, ADS, is a defense supplier, and Coreshell is working with another supplier of autonomous systems.
The Trump administration, despite its open disdain for EVs, acknowledges that batteries are an inescapable part of modern life, the report notes. Like many things in Washington these days, it's leaning on national security as justification for its recent decisions. U.S. battery startups hit a rough patch when the One Big Beautiful Bill eliminated battery and EV incentives, undercutting a chunk of future demand. Defense applications have emerged as a lifeline, helping these companies survive while the automotive industry continues rolling out new models and expecting years of growth, albeit further out than expected. That dynamic is unlikely to change, according to the report.
As battery companies undoubtedly know — and the Trump administration appears to tacitly acknowledge — the future is electric, but the timing is anything but settled, the report states. In the meantime, soldiers and drones still need lightweight and capable batteries from U.S. sources. A few years ago, those batteries could have come from domestic factories that sprung up in the wake of the Inflation Reduction Act, but after the One Big Beautiful Bill gutted battery production incentives, the Pentagon may have had to start looking for alternatives. These new DOE grants might amount to an admission that efforts to kill the American EV industry went a bit too far. The pivot to defense funding suggests Washington may be quietly hedging its bets, preserving industrial capacity under a politically safer banner while the broader electrification debate remains unresolved.