Pentagon Pivot: Battery Startups Lean on Defense Grants as EV Incentives Vanish

U.S. battery startups are increasingly relying on defense contracts and government grants to survive following the elimination of EV and battery incentives under the One Big Beautiful Bill, as TechCrunch first reported.

On Thursday, the Department of Energy announced $500 million in grants designed to advance American energy dominance and reduce reliance on foreign sources. A significant portion of this funding is targeting startups. Notable recipients include:

* **Coreshell**: Received $50 million to expand manufacturing of metallurgical silicon anode material. The company recently added ADS Ventures—a strategic VC owned by defense supplier ADS—as an investor. * **Lilac Solutions**: Awarded $100 million to construct a processing facility on the Great Salt Lake in Utah, with a goal of producing 5,000 metric tons of lithium carbonate annually by 2028. * **Nth Cycle**: Received $100 million to build a facility for refining black mass from recycled lithium-ion batteries to produce nickel and lithium compounds.

While the automotive industry is still projected to spend nearly $18 billion on U.S. battery manufacturing this year, per Mordor Intelligence, the defense sector has become a critical lifeline. Megan O’Connor, CEO and co-founder of Nth Cycle, told TechCrunch that there are "clear demand drivers from the defense sector."

Defense applications now range from fighter jets and torpedoes to infantry radios and drones. TechCrunch notes that as early as 2021, the U.S. Defense Logistics Agency was spending $200 million annually on batteries, but the current shift toward national security justifications suggests the Pentagon is filling a void left by the collapse of domestic EV production incentives.