Key facts
- US battery startups are finding new demand and funding from the defense sector.
- The Department of Energy is awarding $500 million in grants to strengthen the domestic battery supply chain.
- Grants are intended to reduce foreign reliance and enhance national security.
- Coreshell, Lilac Solutions, and Nth Cycle are among the startups receiving significant funding for battery material production and recycling.
- Defense applications for batteries include drones, torpedoes, radios, and fighter jets.
U.S. battery startups, previously reliant on electric vehicle (EV) incentives, have found a new avenue for growth and funding within the defense sector. Following the reduction of EV incentives, which impacted future demand projections, these companies are now powering a range of military applications, from drones and torpedoes to infantry radios and fighter jets.
The Department of Energy announced on Thursday that it is distributing $500 million in grants to strengthen the domestic battery supply chain. This initiative aims to decrease reliance on foreign sources, bolster national security, and promote American energy dominance, with a significant portion of the funding allocated to startups.
Startups like Coreshell, which develops battery materials, are seeing increased interest from defense applications. Coreshell received a $50 million award from the DOE for its metallurgical silicon anode material. Lilac Solutions, focused on lithium extraction from brines, was awarded $100 million to establish a processing facility in Utah, targeting 5,000 metric tons of lithium carbonate annually by 2028. Nth Cycle also secured $100 million to build a facility for refining recycled battery materials into compounds for new batteries.
While the automotive sector still represents a substantial market for battery manufacturing, with an estimated $18 billion in spending expected in the U.S. this year, the defense sector's demand is noted as a clear driver. In 2021, the U.S. Defense Logistics Agency was purchasing approximately $200 million worth of batteries annually.
Despite the setbacks for the EV industry, automakers continue to plan for future growth. However, the immediate need for domestically sourced, lightweight, and capable batteries for soldiers and drones has become more pronounced, especially after the reduction of incentives that previously supported domestic production.