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U.S. battery startups hit a rough patch when the One Big Beautiful Bill eliminated battery and EV incentives, undercutting a chunk of future demand. But recently, they’ve found a lifeline in the defense world, helping to power everything from drones and torpedoes to infantry radios and fighter jets.

The Trump administration, despite its open disdain for EVs, acknowledges that batteries are an inescapable part of modern life. And like many things in Washington these days, it’s leaning on national security as justification for its recent decisions.

The latest comes from the Department of Energy, which announced Thursday that it is awarding $500 million in grants to bolster the battery supply chain in the United States. The program aims to “reduce reliance on foreign sources, bolster national security, and advance American energy dominance.” Much of the money went to startups.

Defense applications of lithium-ion batteries are “absolutely playing out in discussions,” a spokesperson for Coreshella battery materials startup, told Read. The company recently brought on ADS Ventures as an investor; the strategic VC’s parent company, ADS, is a defense supplier, and it’s working with another supplier of autonomous systems. Coreshell received a $50 million award from the DOE to expand manufacturing for its metallurgical silicon anode material.

Other startups received significant grants, too.

Lilac Solutionswhich extracts lithium from brines, landed $100 million to build a processing facility on Utah’s Great Salt Lake to produce 5,000 metric tons of lithium carbonate annually by 2028. Lithium carbonate is a key precursor used in battery production.

Nth Cycle told Read that it received $100 million to build a facility that will refine black mass from recycled lithium-ion batteries, producing lithium and nickel compounds that can be used to make new batteries.

“We’re seeing clear demand drivers from the defense sector.” Megan O’Connor, co-founder and CEO of Nth Cycle, told Read. “But there’s still that in the automotive space as well.”

That dynamic is unlikely to change. Though EVs have been dealt a setback, automakers are still rolling out new models and expecting years of growth, albeit further out than expected.

Defense will continue to be a significant player. Exact numbers are unsurprisingly hard to come by, but even in 2021the U.S. Defense Logistics Agency was buying $200 million worth of batteries annually. But that’s dwarfed by the automotive industry. This year, the automotive industry is expected to spend nearly $18 billion on battery manufacturing in the U.S. alone, according to Mordor Intelligence.

As battery companies undoubtedly know — and the Trump administration appears to tacitly acknowledge — the future is electric, but the timing is anything but settled.

In the meantime, soldiers and drones still need lightweight and capable batteries from U.S. sources. A few years ago, those batteries could have come from domestic factories that sprung up in the wake of the Inflation Reduction Act. But after the One Big Beautiful Bill gutted battery battery production incentives, the Pentagon may have had to start looking for alternatives. These new DOE grants might amount to an admission that efforts to kill the American EV industry went a bit too far.