US battery startups pivot to defense amid EV incentive cuts
Original: US battery startups have found a lifeline in defense
Why This Matters
Defense funding is now a critical bridge sustaining U.S. battery supply chain investment amid weakened EV policy support.
The U.S. DOE announced $500M in battery supply chain grants on August 22, 2026, targeting startups like Coreshell, Lilac Solutions, and Nth Cycle, as defense demand fills the gap left by the One Big Beautiful Bill's elimination of EV and battery incentives.
U.S. battery startups are turning to defense contracts after the One Big Beautiful Bill eliminated EV and battery incentives, removing a significant source of future civilian demand. The Department of Energy responded by announcing $500 million in grants aimed at reducing foreign reliance, bolstering national security, and advancing American energy supply. Key recipients include Coreshell ($50M), which develops metallurgical silicon anode materials and counts defense supplier ADS Ventures among its investors; Lilac Solutions ($100M), which will build a lithium extraction facility at Utah's Great Salt Lake targeting 5,000 metric tons of lithium carbonate annually by 2028; and Nth Cycle ($100M), which will refine black mass from recycled lithium-ion batteries into lithium and nickel compounds. Nth Cycle CEO Megan O'Connor stated, 'We're seeing clear demand drivers from the defense sector,' while also noting continued automotive demand. The U.S. Defense Logistics Agency spent $200M annually on batteries as far back as 2021, though this is dwarfed by the automotive sector's projected $18B in U.S. battery manufacturing spend in 2026, per Mordor Intelligence.