US battery startups have found a lifeline in defense

U.S. battery startups pulled in $500 million in grants from the Department of Energy, throwing a lifeline to an industry that was on the ropes after EV incentives were slashed.

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. But recently, they’ve found a lifeline in the defense world, helping to power everything from drones and torpedoes to infantry radios and fighter jets. The Trump administration, despite its open disdain for EVs, acknowledges that batteries are an inescapable part of modern life. And like many things in Washington these days, it’s leaning on national security as justification for its recent decisions. The latest comes from the Department of Energy, which announced Thursday that it is awarding $500 million in grants to bolster the battery supply chain in the United States. The program aims to “reduce reliance on foreign sources, bolster national security, and advance American energy dominance.” Much of the money went to startups. Defense applications of lithium-ion batteries are “absolutely playing out in discussions,” a spokesperson for Coreshell , a battery materials startup, told Tech Crunch. The company recently brought on ADS Ventures as an investor; the strategic VC’s parent company, ADS, is a defense supplier, and it’s working with another supplier of autonomous systems. Coreshell received a $50 million award from the DOE 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 to produce 5,000 metric tons of lithium carbonate annually by 2028. Lithium carbonate is a key precursor used in battery production. Nth Cycle told Tech Crunch that it received $100 million to build a facility that will refine black mass from recycled lithium-ion batteries, producing lithium and nickel compounds that can be used to make new batteries. “We’re seeing clear demand drivers from the defense sector.” Megan O’Connor, co-founder and CEO of Nth Cycle, told Tech Crunch. “But there’s still that in the automotive space as well.” That dynamic is unlikely to change. Though EVs have been dealt a setback, automakers are still rolling out new models and expecting years of growth, albeit further out than expected. Defense will continue to be a significant player. Exact numbers are unsurprisingly hard to come by, but even in 2021 , the U.S. Defense Logistics Agency was buying $200 million worth of batteries annually. But that’s dwarfed by the automotive industry.

This year, the automotive industry is expected to spend nearly $18 billion on battery manufacturing in the U.S. alone, according to Mordor Intelligence. As battery companies undoubtedly know — and the Trump administration appears to tacitly acknowledge — the future is electric, but the timing is anything but settled. 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 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. When you purchase through links in our articles, we may earn a small commission . This doesn’t affect our editorial independence. Tim De Chant is a senior climate reporter at Tech Crunch. He has written for a wide range of publications, including Wired magazine, the Chicago Tribune, Ars Technica, The Wire China, and NOVA Next, where he was founding editor. De Chant is also a lecturer in MIT’s Graduate Program in Science Writing, and he was awarded a Knight Science Journalism Fellowship at MIT in 2018, during which time he studied climate technologies and explored new business models for journalism. He received his PhD in environmental science, policy, and management from the University of California, Berkeley, and his BA degree in environmental studies, English, and biology from St. Olaf College. You can contact or verify outreach from Tim by emailing tim.dechant@techcrunch.com . In less than 48 hours, your chance to save up to $300 on your tickets will end! Two years after launch, Walmart’s Flipkart is closing in on India’s quick-commerce leaders Jagmeet Singh Inherent, founded by Deep Mind alumni, says its AI ‘teammate’ just outperformed Anthropic and OpenAI at replicating research Anna Heim Michael Polansky is training an AI model on skin that’s still alive Connie Loizos How AI accounting startup Rillet raised $100M and became a unicorn in 48 hours Dominic-Madori Davis Tesla’s solar roof is dead — here’s what went wrong Tim De Chant Oura faces lawsuit accusing it of misleading consumers about sleep-tracking accuracy Aisha Malik Home batteries are suddenly cheap and everywhere. Here’s why.

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