The Department of Energy’s $500 million in US battery startup grants landed this week across seven projects, covering critical mineral processing, battery manufacturing, and recycling. The timing is not subtle: Congress just finished stripping out the EV and battery incentives that gave many of these companies their original reason to exist.
The grants are the third funding round from the DOE’s Battery Materials Processing and Battery Manufacturing and Recycling programmes, both authorised under the Infrastructure Investment and Jobs Act. The Battery Manufacturing and Recycling Grants programme carries a total authorisation of $3 billion, with $600 million appropriated annually for fiscal years 2022 through 2026. So this is not a one-off lifeline; it is a sustained federal commitment that has survived a political environment openly hostile to the industry it is funding.
The justification the administration has settled on is national security, which, in Washington right now, tends to make almost anything bipartisan. The DOE framed the awards around reducing reliance on foreign sources and advancing American energy dominance. The subtext is China’s grip on the battery supply chain, and specifically on graphite.
How the US Battery Startup Grants Break Down
Coreshell, a battery materials startup, picked up $50 million to fund what the company says will be the first US gigafactory for metallurgical silicon anodes, according to Coreshell’s own announcement. The relevance to defence is direct: metallurgical silicon fully replaces graphite, a critical mineral that China controls. Cut graphite out of the supply chain and you remove one of the more uncomfortable dependencies in US battery manufacturing.
The performance case is also real. Coreshell’s commercial-scale cells deliver 30% or more additional capacity while cutting costs by up to 25% compared to standard graphite anodes. Metallurgical silicon costs roughly half as much as graphite per kilogram but stores up to ten times the energy. For drones and infantry radios, where weight and energy density are non-negotiable, that arithmetic matters. A spokesperson for Coreshell told TechCrunch that defence applications are ‘absolutely playing out in discussions,’ and the company recently brought on ADS Ventures (whose parent is a defence supplier) as an investor.
Lilac Solutions received $100 million to build a lithium processing facility on Utah’s Great Salt Lake, targeting 5,000 tonnes per annum of battery-grade lithium carbonate by 2027, with first lithium from the commercial facility expected that year. A Phase 2 expansion is already in the plan, targeting 20,000 tpa. The company has already signed a binding 10-year offtake agreement with Traxys North America for that output, which removes at least one of the speculative elements that plague early-stage extraction projects.
The pilot results from the Great Salt Lake are credible. Lilac’s pilot plant achieved 87% average lithium recovery on brine with a lithium concentration of 69 mg/L, beating the FEL-3 design basis of 84%, and delivered 99.97% overall impurity rejection. Those are not marketing numbers; they are the kind of figures that move a project from slide deck to construction finance. To supply the facility, Lilac completed a commercial-scale ion exchange media manufacturing line in Fernley, Nevada in January 2026, with initial capacity of 200 tonnes annually, enough, the company says, to support up to 100,000 tpa of lithium carbonate equivalent production globally.
Nth Cycle received a further $100 million to build a facility refining black mass from recycled lithium-ion batteries into lithium and nickel compounds. Megan O’Connor, co-founder and CEO, told TechCrunch: ‘We’re seeing clear demand drivers from the defense sector. But there’s still that in the automotive space as well.’
Defence Is Real, but Automotive Still Dwarfs It
Nobody should mistake defence demand for a full replacement of what the One Big Beautiful Bill took away. The US Defence Logistics Agency was buying roughly $200 million worth of batteries annually as far back as 2021. The automotive industry, by contrast, is expected to spend nearly $18 billion on battery manufacturing in the US alone this year, according to Mordor Intelligence. Defence is a useful customer; it is not a substitute market.
What these grants do represent is a quiet acknowledgement that gutting domestic battery production incentives had consequences that ran wider than the EV industry. Soldiers, drones, torpedoes, and fighter jets all run on batteries. The supply chain that makes those batteries cannot be built on defence contracts alone, and the administration appears to know it, even if the policy framework around EVs remains contradictory.
The next question is whether $500 million across seven projects is enough to build the supply chain depth the Pentagon actually needs, or whether it is simply the most politically comfortable number available right now. The answer will probably depend on which startups can get from pilot to full-scale production before the next funding round, and the next administration.
