The U.S. Dept. of Energy on May 2 announced $3.1 billion in grants for battery and component production to support building new U.S. facilities, and expanding or retrofitting existing ones. Separately, the administration is also earmarking $60 million toward electric vehicle battery recycling and reuse.

The funds are part of a Biden administration push to achieve energy independence, as well as reach a 2030 goal for electric vehicles to comprise half of all vehicles sold in the country, a complement to other recently announced funding infusions for efforts including increasing U.S. mining and development of critical minerals such as lithium, a crucial EV battery component.

The funds come from the new federal infrastructure investment law, which includes more than $7 billion marked for battery-supply-chain related investments between fiscal 2022 and fiscal 2026. Awards will cover both demonstration and commercial facility projects focusing on production of battery materials, component parts and battery cell manufacturing and recycling.  The U.S. shortfall was outlined in a recent Senate hearing.

DOE expects to grant between 17 and 34 awards, each ranging between $50 million and $400 million.

“Positioning the United States front and center in meeting the growing demand for advanced batteries is how we boost our competitiveness and electrify our transportation system,” said U.S. Secretary of Energy Jennifer M. Granholm in a statement, adding that the move will “give our domestic supply chain the jolt it needs to become more secure and less reliant on other nations.” 

In May 5 testimony before the Senate Environment and Public Works Committee, Granholm tied the cost and stability of battery production to EV affordability, saying, “if you want to bring down price of an EV vehicle, you need to bring down the price of a battery and control inputs for it.” She said she was hopeful Congress will expand tax credits for EV vehicle purchases, but said there is no Biden administration 2023 budget item for EV vehicle credits.

DOE anticipates EV and battery demand to increase market growth by a factor of between five and ten by 2030, with an already strained U.S. supply heavily reliant on China for most of the battery production cycle—including materials, components and battery manufacturing, according to a February 2022 agency report on the energy storage supply chain. “Even end-of-life (EOL) recycling and reuse processing is dominated by other countries, and most used batteries collected in the United States today are exported,” it states.

The U.S. currently has 13% of global lithium-ion battery cell manufacturing capacity, compared to China's 80% share, and planned U.S. capacity is even lower, with domestic factories comprising just 10% of global manufacturing plants that are planned or under construction.

Letters of intent for funding are due May 27, and completed applications by July 1.

DOE will consider a project's alignment with Justice40 environmental justice initiatives and job opportunities and benefits for low income and disadvantaged communities in assessing applications.

The administration expects to notify winners by October, and negotiate awards between then and April 2023.