--- title: "With EV incentives gone, US battery startups are selling to the Pentagon" description: "The Department of Energy announced $500m in grants on Thursday, with $100m each to Lilac Solutions and Nth Cycle and $50m to Coreshell. Defense buying is a fraction of the automotive market, but it is steady, and the automotive subsidies are gone." category: "Business" category_url: https://newsparlor.com/category/business author: "Marcus Reed" published: 2026-08-22T12:41:25-04:00 updated: 2026-08-22T12:41:25-04:00 canonical: https://newsparlor.com/article/with-ev-incentives-gone-us-battery-startups-are-selling-to-the-pentagon tags: ["batteries", "defense", "energy-policy", "startups", "lithium"] --- # With EV incentives gone, US battery startups are selling to the Pentagon The Department of Energy announced $500m in grants on Thursday, with $100m each to Lilac Solutions and Nth Cycle and $50m to Coreshell. Defense buying is a fraction of the automotive market, but it is steady, and the automotive subsidies are gone. The Department of Energy announced $500 million in grants on Thursday aimed at the domestic battery supply chain, and the companies receiving the largest awards are ones whose commercial market has just been cut out from under them, [TechCrunch reports](https://techcrunch.com/2026/08/22/us-battery-startups-have-found-a-lifeline-in-defense/). ## Who got what Lilac Solutions, which extracts lithium from brines, received $100 million for a processing facility on Utah's Great Salt Lake, and is targeting 5,000 metric tons of lithium carbonate a year by 2028. Nth Cycle received $100 million. It refines black mass, the shredded residue of used lithium-ion batteries, into lithium and nickel compounds that can go back into new cells. Coreshell received $50 million to expand manufacturing of metallurgical silicon anode material. Among its investors is ADS Ventures, whose parent company ADS is a defense supplier. ## What changed The legislation styled the One Big Beautiful Bill eliminated battery and electric vehicle incentives. For companies that had built plans around a subsidized domestic EV build-out, that removed the demand curve they were financed against. Defense is what is left. The military buys batteries for drones, torpedoes, infantry radios and fighter jets, and it buys them on multi-year contracts that do not evaporate when a tax credit is repealed. Megan O'Connor, co-founder and chief executive of Nth Cycle, described a market with two legs rather than one: "We're seeing clear demand drivers from the defense sector. But there's still that in the automotive space as well." ## The size problem The numbers make clear how partial a substitute this is. The Defense Logistics Agency bought about $200 million of batteries a year as of 2021. The US automotive industry is expected to spend nearly $18 billion on battery manufacturing this year. Defense demand is roughly one percent of the automotive figure. It cannot absorb an industry built for cars. What it can do is keep specific companies solvent and specific factories open through a gap, which is a different and more modest claim than the framing of a lifeline suggests. There is a second consideration, which is what defense demand does to what gets built. Military batteries are not automotive batteries at smaller volume. They are specified for extreme temperatures, long dormancy, shock resistance and, in some cases, single use. A company that optimizes for those requirements is not automatically well placed when the consumer market returns. ## What is and is not settled here These are announced Department of Energy grants, not signed defense contracts, and the distinction matters. A grant funds a facility; it does not guarantee anyone buys what the facility makes. None of the three companies has announced a Pentagon procurement contract in this account. The report does not address Chinese competition, import tariffs, or any named defense procurement program, and we have not supplied those from elsewhere. We verified this from a single publication. The strategic logic behind the grants is nonetheless legible without any of that. Framing battery production as a matter of national security rather than climate policy is what allows federal money to keep flowing to it after the climate rationale has been legislated away. Whether that is a durable basis for an industry, or a bridge to somewhere, is the question the next two years will answer. ## Sources - [US battery startups have found a lifeline in defense](https://techcrunch.com/2026/08/22/us-battery-startups-have-found-a-lifeline-in-defense/)