US Battery Startups Turn to Defense After EV Incentives Are Cut
Saturday, 22 August 2026, 18:48
With electric vehicle incentives disappearing, battery innovators are looking toward an unexpected customer that still needs reliable power at scale.
American startups working with battery technologies have lost some of their prospects in the electric vehicle market after the One Big Beautiful Bill Act eliminated incentives for batteries and EVs. However, the U.S. defense sector, which needs reliable power sources for drones, torpedoes, infantry radios, and fighter jets, could become a new pillar for the industry.
Donald Trump’s administration is skeptical about the development of electric vehicles, but recognizes the strategic importance of batteries for the economy and national security. Against this backdrop, the U.S. Department of Energy has allocated $500 million in grant funding to develop the American battery supply chain.
The funding is intended to help the United States reduce its dependence on foreign suppliers, strengthen its domestic industrial base, and support energy security. A significant share of the grants has gone to young companies that manufacture battery materials or recycle used batteries.
Support for Battery Material Production in the United States
Coreshell will receive $50 million to expand production of metallurgical silicon anode material. The startup develops battery components and has already brought in ADS Ventures, affiliated with defense supplier ADS, as an investor.
The use of lithium-ion batteries in defense is “certainly being discussed.”
– Coreshell representative, in a comment to TechCrunch
Lilac Solutions received $100 million to build a facility near the Great Salt Lake in Utah. The company expects the plant to produce 5,000 metric tons of lithium carbonate per year by 2028.
Another $100 million was awarded to Nth Cycle. The funds will be used to build a plant that will process black mass from old lithium-ion batteries into lithium and nickel compounds. These materials can be reused in the production of new batteries.
We see clear demand drivers from the defense sector. But demand remains strong in the automotive industry as well.
– Megan O’Connor, co-founder and CEO of Nth Cycle, in a comment to TechCrunch
The Defense Sector Is Becoming an Important Market for Batteries
The needs of the defense industry cannot compare with the scale of the automotive market, but they could become a stable additionalelligence, automakers are expected to spend nearly $18 billion on battery production in the United States this year
Following the reduction of incentives for electric vehicles, government grants and national security-related contracts are becoming particularly important for American battery startups. Support for domestic production of lithium, silicon materials, and battery recycling could help them remain in the market and strengthen the U.S. supply chain for critical components.
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