The Department of Energy awarded $500 million in grants to U.S. battery startups Thursday, targeting companies like Coreshell and Lilac Solutions to reduce foreign reliance and strengthen the domestic supply chain.
The timing reveals a harder reality: federal support for batteries is increasingly framed around national security and defense demand—not consumer electric vehicles. The Trump administration, despite skepticism toward EV adoption, has embraced battery development as essential infrastructure, justifying investments through a military lens.
This pivot matters because the consumer EV market just lost its primary demand driver. Earlier legislation eliminated battery and EV tax incentives that had underpinned growth projections for the sector. That removal forced battery startups to find alternative revenue sources fast.
Defense applications provided the escape hatch. Batteries now power drones, torpedoes, infantry radios and fighter jets. The U.S. Defense Logistics Agency purchased $200 million worth of batteries annually in 2021—a niche market compared to automotive, which is projected to spend nearly $18 billion on battery manufacturing in the U.S. this year, according to Mordor Intelligence. But for cash-strapped startups facing demand destruction in their core market, defense was a lifeline.
Coreshell, a battery materials startup, received $50 million to expand manufacturing of its metallurgical silicon anode material. The company's connections underline the defense-sector pivot: it recently secured investment from ADS Ventures, whose parent company is a defense supplier. A Coreshell spokesperson confirmed that defense applications for lithium-ion batteries are "absolutely playing out in discussions."
Lilac Solutions, which extracts lithium from brines, secured $100 million to build a processing facility on Utah's Great Salt Lake. The facility aims to produce 5,000 metric tons of lithium carbonate annually by 2028.
Nth Cycle, which refines black mass from recycled lithium-ion batteries to yield lithium and nickel compounds, received $100 million. CEO Megan O'Connor said the company is "seeing clear demand drivers from the defense sector," while acknowledging that "demand still exists in the automotive space as well."
The numbers reveal the economics: defense demand is real but remains a secondary market for now. Automakers continue rolling out EV models and expect years of growth, though on a longer timeline than previously projected. The transition to electric vehicles may be certain, but its velocity—and which companies survive the interim—remains unsettled.
