Battery startups that watched EV incentives evaporate are finding a new customer: the Pentagon. The US Department of Energy on Thursday spread $500M in grants across the domestic battery supply chain, aiming to cut reliance on foreign sources and shore up national security – and much of the money went to startups.
Nth Cycle and Lilac Solutions each collected $100M. Nth Cycle will refine black mass from recycled lithium-ion batteries into lithium and nickel compounds for new cells; Lilac will build a lithium processing facility on Utah’s Great Salt Lake, targeting 5,000 metric tons of lithium carbonate annually by 2028.
Battery materials startup Coreshell took $50M to expand manufacturing of its metallurgical silicon anode. It recently added ADS Ventures, the strategic VC arm of a defense supplier, as an investor – a sign of where the demand now lives.
Nth Cycle’s CEO points to defense as a clear demand driver even as automakers keep ordering cells, and the company says its recycling line is built to serve both.
The context: the One Big Beautiful Bill wiped out battery and EV production incentives, undercutting a chunk of expected demand. But the military still buys – the Defense Logistics Agency spent about $200M a year on batteries even in 2021 – and drones, torpedoes, infantry radios and fighter jets all need domestic cells. Automotive manufacturing spend, meanwhile, is expected to reach nearly $18B in the US this year.
For startups built for the EV boom, the grants are a lifeline that keeps factories alive while the market catches up.
