Energy Department Announces $3.5 Billion Investment to Boost US Battery Industry

A Tesla Model Y charges at a EV charge station in Lane Cove in Sydney, Australia, on Jan. 19, 2021. Brendon Thorne/Getty Images

The U.S. Department of Energy (DOE) on Nov. 15 announced an investment of up to $3.5 billion for companies aimed at boosting domestic production of advanced batteries and the materials that go into them.

The funding—taken from President Joe Biden’s Bipartisan Infrastructure Law, which was signed into law in 2021—will go towards expanding domestic facilities for battery-grade processed critical minerals, battery components, and cell and pack manufacturing, the DOE said.

It will also focus on next-generation technologies and battery chemistries, in addition to lithium-based technologies.

Lithium Ion is currently the dominant battery type for electric vehicles (EVs) and electricity storage.

Such an expansion is critical to supporting the Biden administration’s push away from fossil fuels and nuclear energy and toward renewable energy, such as wind and solar; with the government hoping to reach a net-zero emissions economy by 2050 and for electric vehicles to make up half of all new light-duty vehicle sales by 2030.

In 2022, just 13 percent of the United States’ energy was generated by renewable sources, according to the U.S. Energy Information Administration (EIA).

According to the DOE, the latest funding will help aid in strengthening the domestic supply chain for high-capacity batteries, including non-lithium batteries, and ensure the United States maintains a competitive battery materials processing industry to supply the North American battery supply chain.

The Amazon Fort Powhatan Solar Farm is seen in an aerial view in Disputanta, Va., on Aug. 19, 2022. Drew Angerer/Getty Images

Funding Will Boost Global Competitiveness

It will also help to enhance national l security and reduce reliance on what it called “foreign entities of concern.”

Currently, China dominates the global EV battery supply chain, with the country processing more than half the world’s lithium, two-thirds of its cobalt, more than 70 percent of its graphite, and about one-third of its nickel, according to the International Energy Agency.

The announcement came on the same day the United States and China agreed to continue working with other countries on climate cooperation.

According to the DOE, the investment, which will be administered by its Office of Manufacturing and Energy Supply Chains (MESC), will also focus on creating and retaining “good-paying union jobs in the manufacturing workforce.”

“Positioning the United States front and center to meet the growing demand for advanced batteries is how we boost our global competitiveness, maintain and create good-paying jobs, and strengthen our clean energy economy,” said U.S. Secretary of Energy Jennifer Granholm in a statement.

“President Biden’s historic investments are giving the boost needed to build a robust domestic battery supply chain that is Made-in-America,” she added.

Nissan and Volkswagen electric cars sit parked at a Charge Point EV charging station in Corte Madera, Calif., on July 28, 2023. Justin Sullivan/Getty Images

Green Transition ‘Lowering Energy Costs’

Batteries are essential for grid storage, the resilience of homes and businesses, and electrification of the transportation sector, officials said.

“With the demand for electric vehicles (EVs) and stationary storage alone projected to increase the size of the lithium battery market by five- to ten-fold by the end of the decade, it is essential that the United States invests in the capacity to accelerate the development of a resilient supply chain for high-capacity batteries, including non-lithium batteries,” the DOE said.

An October report from Kelley Blue Book revealed that sales of EVs hit a record in the third quarter of 2023, with consumers purchasing more than 300,000 EVs for the first time in the United States.

According to estimates, total EC sales in Q3 hit 313,086, marking a 49.8 percent increase from the same period a year prior.

However, the average price paid for a new electric vehicle in October was $51,762 compared to the average price of a new non-luxury gasoline-powered vehicle in October, which was $44,331.

A separate study published this month in the academic journal Joule found that EVs are being driven much less than their gas-powered counterparts, which experts say could lead to federal agencies overestimating the emissions savings from the EV push.

Thursday’s billion-dollar funding announcement by the DOE comes after an initial round of funding went to 20 companies in October to support the building and expansion of facilities to process critical battery materials, including those that manufacture components from recycled material.

The Associated Press contributed to this report.