The Department of Energy announced Thursday that it is awarding $500 million in grants to strengthen the U.S. battery supply chain, with much of the funding going to startups. The program is designed to reduce reliance on foreign sources, bolster national security, and advance American energy dominance. The announcement comes after the One Big Beautiful Bill eliminated battery and EV incentives, which undercut a chunk of future demand for domestic battery makers. Defense applications are now providing a lifeline for these companies, powering everything from drones and torpedoes to infantry radios and fighter jets.
Among the recipients is Coreshell, a battery materials startup that received $50 million to expand manufacturing for its metallurgical silicon anode material. The company told TechCrunch that defense applications of lithium-ion batteries are playing out in its discussions. Coreshell recently brought on ADS Ventures as an investor; the strategic VC’s parent company, ADS, is a defense supplier, and it is working with another supplier of autonomous systems.
Lilac Solutions, which extracts lithium from brines, landed $100 million to build a processing facility on Utah’s Great Salt Lake. The facility is expected to produce 5,000 metric tons of lithium carbonate annually by 2028, a key precursor used in battery production. Nth Cycle also 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.
Megan O’Connor, co-founder and CEO of Nth Cycle, said her company is seeing clear demand drivers from the defense sector, though automotive demand remains as well. The Trump administration, despite its open disdain for EVs, acknowledges that batteries are an inescapable part of modern life, and it is leaning on national security as justification for its recent decisions. The dynamic between defense and automotive demand is unlikely to change soon, as automakers are still rolling out new models and expecting years of growth, albeit further out than expected.
Exact defense battery spending is hard to come by, but in 2021, the U.S. Defense Logistics Agency was buying $200 million worth of batteries annually. That figure is dwarfed by the automotive industry, which is expected to spend nearly $18 billion on battery manufacturing in the U.S. alone this year, according to Mordor Intelligence. The new DOE grants may amount to an admission that efforts to kill the American EV industry went too far, given that domestic factories built after the Inflation Reduction Act once could have supplied the Pentagon.
In the meantime, soldiers and drones still need lightweight, capable batteries from U.S. sources. A few years ago, those could have come from domestic factories that sprang 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 look for alternatives. The future is electric, but the timing is anything but settled.
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