US battery startups have found a lifeline in defense
US battery startups are increasingly looking to defence contracts and government support after the One Big Beautiful Bill removed battery and electric-vehicle incentives, weakening expected commercial demand. The shift matters because batteries are essential to military equipment, from drones and torpedoes to communications gear and fighter jets, while the US seeks to reduce reliance on overseas supply chains.
The Department of Energy has awarded $500 million to strengthen domestic battery supply chains, with several startups receiving large grants: Coreshell gained $50 million for silicon anode material manufacturing, while Lilac Solutions and Nth Cycle each received $100 million. Lilac plans to produce 5,000 metric tonnes of lithium carbonate annually by 2028, and Nth Cycle will refine recycled battery material; defence demand may help bridge the gap, although automotive battery investment remains far larger at an expected $18 billion in the US this year.
- Defence demand is supporting US battery startups after EV incentives were cut.
- DOE awarded $500 million for domestic battery supply chains.
- Automotive battery spending still greatly exceeds military demand.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Supporters argue that defence-linked funding can preserve strategically important domestic battery expertise at a moment when private investment has retreated and foreign supply chains remain concentrated. They contend that advanced batteries have clear national-security uses, from resilient bases and drones to grid reliability, while grants can help firms reach commercial scale and retain skilled jobs. On this view, public support is a prudent investment in industrial capacity rather than a departure from market discipline.
The case against
Critics argue that redirecting struggling battery startups towards defence risks making military procurement a substitute for a coherent civilian clean-energy strategy. They may question whether grants are selecting viable technologies or merely sustaining firms whose business cases weakened once consumer EV incentives changed, and warn that defence priorities can narrow innovation or create dependence on government contracts. On this view, scarce public funds should be assessed against transparent civilian climate, affordability and value-for-money objectives.
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