US battery startups find a defense lifeline
US Department of Energy awards $500 million in grants to boost the domestic battery supply chain after EV incentives were cut.
Stock photo for illustration only, not from the actual event
- US DOE awards $500 million to strengthen domestic battery supply chain
- Startups like Coreshell and Lilac Solutions secure major funding grants
- Defense applications emerge as a crucial lifeline after EV subsidy cuts
Battery startups in the United States hit a rough patch when the One Big Beautiful Bill legislative measure eliminated incentives for batteries and electric vehicles, undercutting a significant chunk of future demand. Recently, however, these companies have found a vital lifeline in the defense sector, helping power everything from military drones and torpedoes to infantry radios and fighter jets.
Despite its open disdain for EVs, the administration acknowledges that batteries remain an inescapable part of modern infrastructure and has leaned heavily on national security as the primary justification for its recent funding decisions.
The Department of Energy announced Thursday that it is awarding $500 million in grants to bolster the U.S. battery supply chain. The program aims to reduce reliance on foreign sources, bolster national security, and advance American energy dominance, with a substantial portion of the capital directed toward innovative startups.
The pivot toward defense markets highlights a classic strategy for hardware and energy startups facing regulatory headwinds. Securing government and defense contracts provides reliable cash flow and long-term research validation, helping deep-tech firms weather policy shifts that temporarily stall commercial EV adoption.
Defense applications of lithium-ion batteries are actively dominating industry discussions. For instance, battery materials startup Coreshell recently brought on ADS Ventures as an investor and received a $50 million award from the DOE to expand manufacturing for its metallurgical silicon anode material.
Other startups secured substantial grants as well. Lilac Solutions, which extracts lithium from brines, secured $100 million to build a processing facility on Utah’s Great Salt Lake to produce 5,000 metric tons of lithium carbonate annually by 2028. Meanwhile, Nth Cycle secured $100 million to build a facility refining black mass from recycled lithium-ion batteries.
Stock photo for illustration only, not from the actual event
"We’re seeing clear demand drivers from the defense sector."
Megan O’Connor, co-founder and CEO of Nth Cycle
Although the automotive industry has faced setbacks due to shifting policies, automakers continue rolling out new models. This year, the U.S. automotive industry is projected to spend nearly $18 billion on domestic battery manufacturing alone, according to Mordor Intelligence. Nonetheless, soldiers and drones still require reliable local power sources, and the new DOE grants may serve as an implicit acknowledgment that the push against the EV sector went a bit too far.
Source: TechCrunch
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