U.S. Battery Startups Find a Defense Lifeline After EV Incentive Cuts

U.S. battery startups faced a tougher outlook after the One Big Beautiful Bill eliminated battery and EV incentives, cutting into expected future demand. TechCrunch reports that defense applications are now emerging as a lifeline, with batteries needed for drones, torpedoes, infantry radios, fighter jets, and other military systems. The key takeaway: national security is becoming a stronger rationale for supporting domestic battery capacity.

The Department of Energy announced $500 million in grants to strengthen the U.S. battery supply chain. The program aims to reduce reliance on foreign sources, bolster national security, and advance American energy dominance. Much of the funding went to startups, showing how public money is being used to keep battery materials and production capacity moving despite policy uncertainty around EVs.

Coreshell received a $50 million DOE award to expand manufacturing for its metallurgical silicon anode material. Lilac Solutions landed $100 million to build a lithium processing facility on Utah’s Great Salt Lake, targeting 5,000 metric tons of lithium carbonate annually by 2028. Nth Cycle told TechCrunch it received $100 million to build a facility that refines black mass from recycled lithium-ion batteries into lithium and nickel compounds for new batteries.

Defense will remain an important buyer because soldiers and autonomous systems need lightweight, capable batteries from U.S. sources. Still, TechCrunch notes that defense battery spending is much smaller than automotive battery manufacturing: the U.S. Defense Logistics Agency was buying $200 million worth of batteries annually in 2021, while the automotive industry is expected to spend nearly $18 billion on U.S. battery manufacturing this year. The implication is clear: defense can stabilize parts of the sector, but the broader battery market still depends heavily on transportation and energy demand.