US battery startups find a lifeline in defense

US battery startups faced a rough patch when the One Big Beautiful Bill eliminated battery and EV incentives, cutting into a chunk of expected future demand. Recently, though, they’ve found a lifeline in defense, helping 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 is leaning on national security to justify recent decisions. The latest came from the Department of Energy, which announced Thursday it is awarding $500 million in grants to bolster the battery supply chain in the United States, aiming to “reduce reliance on foreign sources, bolster national security, and advance American energy dominance.” Much of the money went to startups.

Coreshell, a battery materials startup, received a $50 million DOE award to expand manufacturing of its metallurgical silicon anode material. A company spokesperson told TechCrunch that defense applications are already a major part of internal discussions; Coreshell recently brought on ADS Ventures as an investor — the strategic VC’s parent company, ADS, is a defense supplier working with another supplier of autonomous systems.

Other startups received significant grants too. Lilac Solutions, which extracts lithium from brines, landed $100 million to build a processing facility on Utah’s Great Salt Lake, aiming to produce 5,000 metric tons of lithium carbonate annually by 2028. Nth Cycle received $100 million to build a facility that will refine black mass from recycled lithium-ion batteries into lithium and nickel compounds for new batteries. “We’re seeing clear demand drivers from the defense sector,” Nth Cycle co-founder and CEO Megan O’Connor told TechCrunch. “But there’s still that in the automotive space as well.”

Exact figures on defense demand are hard to come by, but in 2021 the U.S. Defense Logistics Agency was already buying $200 million worth of batteries annually. That’s dwarfed by the automotive industry, which is expected to spend nearly $18 billion on battery manufacturing in the U.S. this year alone, according to Mordor Intelligence. A few years ago, batteries for defense uses could have come from domestic factories that sprang up under the Inflation Reduction Act; after the One Big Beautiful Bill gutted those incentives, the Pentagon may have had to look for alternatives.

Why it matters

The new DOE grants look like a tacit admission that efforts to unwind EV-era incentives went further than intended, with defense demand now propping up a domestic battery industry the administration otherwise stopped subsidizing.