Trump Puts Pentagon Loan Behind Next-Generation Batteries to Leapfrog China

Chinese companies dominate the world’s supply of the “good enough” batteries used to power AI data centers, electricity grids and electric vehicles. Now the Trump administration, wary of growing Chinese export controls on these batteries and some of the key materials that go into them, is pouring funds into efforts to cut U.S. dependence on Chinese supplies.

In a ceremony Friday, President Donald Trump, surrounded by members of his cabinet, unveiled hundreds of millions of dollars in conditional loans to a copper project, a scandium mining firm and a company that makes magnets without rare earth metals. Most significantly, he announced a $1.4 billion conditional loan to Sila Nanotechnologies, an Alameda, Calif., developer of next-generation silicon-carbon anodes.

If scaled up, the production of such anodes has the potential to erode China’s stranglehold on the battery industry.

Silicon is vastly more prevalent in the Earth’s mantle than graphite, the material used in virtually all battery anodes today. Its physics are superior in key ways—it theoretically holds 10 times more lithium than graphite can. And it’s cheaper.

The administration’s dramatic move signaled that the U.S. intends to try to bypass Chinese battery technology with next-gen batteries that would power a drone or an electric vehicle to travel further, and allow them to charge much faster.

It also reflects a U.S. aim of getting around China’s vast dominance of the world’s supply of graphite and the anodes made from them.

In an interview over the weekend, Sila Nano CEO Gene Berdichevsky said the startup would use the funds to significantly expand anode production at its factory in Moses Lake, Wash., and produce complete battery cells as well.

For a decade and a half, the U.S. has largely stood by as China has built up a towering advantage in the manufacture of batteries that power some of the world’s most important technologies, in addition to most of the metals and components that go into them. Just one Chinese company, Contemporary Amperex Technologies Ltd., today controls more than 40% of the world’s lithium-ion battery market, even though it was founded only 15 years ago.

Most of those batteries use conventional lithium-iron-phosphate technology and graphite anodes. Car companies and stationary storage buyers have adopted LFP as a workhorse battery because it’s cheap and delivers most of the performance needed in EVs and AI data centers.

But last October, as geopolitical tensions increased between the U.S. and China, Beijing responded to U.S. restrictions on the export of chips to China by widening export controls on the export of graphite and LFP batteries.

Meanwhile, last September, Sila had finished construction of the Moses Lake plant, and Berdichevsky had been making the rounds of government agencies in Washington looking for funding to expand the facility further.

Berdichevsky, who founded Sila in 2011 after a stint at Tesla in its early days, said he told Trump administration officials that China’s chokehold on graphite was “a huge problem, and Sila can’t solve it entirely, but we can help solve it.” This was because the more silicon carbon used in an anode, the less graphite it required.

“We went in and said, ‘Look, we can scale up 10x, 20x, 30x. And not only that, but we are going to do this in a way where we are leapfrogging the technology, which is a much more American way to do this, where we’re not just going to copy what someone else has done. We can leapfrog and we can be first and we can be best and we can get much higher performance,’” he said.

Berdichevsky ended up at the Pentagon’s Office of Strategic Capital, which has $200 billion in lending authority and is staffed by bankers from investment banks and private equity firms who formerly worked on Wall Street.

Sila has to meet certain requirements before getting the loan, including making a matching investment in the expansion, but Berdichevsky declined to provide any details. He also declined to say whether a condition of the deal was providing a stake in the company to the federal government. The U.S. has taken stakes in lithium producer Lithium Americas and rare earth metals producer MP Materials in exchange for government support.

Last month, Sila raised a $300 million funding round that it said it would use to expand the Moses Lake plant.

The Trump administration’s other battery initiatives included a $1 billion loan for an Arizona copper project by Ivanhoe Electric and $150 million to Niron Magnetics, which says it is developing magnets that don’t require rare earth metals.

The administration also awarded a $400 million loan to Sunrise Energy Metals, an Australian company that mines scandium, a metal used to fortify aluminum used in aerospace, and an $85 million loan to Strategic Bauxite, a producer of bauxite, also used in aluminum production. Sunrise shares rose 10% on Monday on the news.

Trump said the administration would also distribute $180 million in grants to schools training mining engineers.

”We all look forward to working not just nationally but with our allies around the world to ensure that we have supply chains that are diversified and reliable and no country can ever hold this over our head and threaten us in the future,” Secretary of State Marco Rubio said at the event.

Noteworthy

The Pentagon canceled a tender to buy $300 million of lithium for its strategic stockpile as lithium producers balked at committing to a fixed-price contract for five years. The price of lithium has spiked this year after three years of extremely low prices, and industry veterans expect even higher prices over the coming two or three years amid forecasts of shortage of the metal, used in batteries.

Base Power, a Texas-based manufacturer of home lithium-ion batteries, raised $1 billion in a Series D round at a $13 billion valuation. Base, co-founded by Zach Dell, a son of billionaire Michael Dell, leases its batteries to homeowners at a cut-rate $19 a month plus the price of installation. It earns money by buying and selling the electricity stored in the batteries.

Recommended Newsletter

Start your day with Applied AI, which covers how leading businesses are leveraging AI to automate tasks. Subscribe now for free to get it delivered to your inbox twice a week.

Upcoming Event: AI Agenda Live SF 2026

Wednesday, September 23: Purchase your ticket to AI Agenda Live, where The Information’s reporting team will convene the leaders driving the next era of AI (more details).

Steve LeVine is editor of The Electric. Previously, he worked at Axios, Quartz and Medium, and before that The Wall Street Journal and The New York Times. He is the author of The Powerhouse: America, China and the Great Battery War, and is on Twitter @stevelevine