US Battery Materials Investment Stalls Amid Policy Uncertainty and Market Challenges

The pipeline of US battery materials projects is stalling
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The rapid investment in US battery materials is now facing significant delays. Many companies are either downsizing, postponing, or completely canceling projects that do not align with the current administration’s priorities. Factors such as tariffs, technological challenges, and a lack of demand are contributing to this slowdown, resulting in a partial retreat within the industry.

According to data from the Big Green Machine, a clean technology investment tracking initiative by Wellesley College, 19 battery component or mineral extraction projects were announced in the US during the first half of 2023, representing a planned investment of $6.7 billion. However, since the election, only three new projects have been announced. Jay Turner, an environmental historian and leader of the Big Green Machine, notes that the current policy environment has discouraged investment. “As soon as the administration took office, it was clear that the policy environment was going to become very unfavorable,” he states.

In May, the US Department of Energy (DOE) announced reviews of 179 projects that received awards, particularly those funded in the final days of the previous administration. One such project is a planned plant in Connecticut by Nanoramic Laboratories that aims to produce a new type of battery binder. This project is currently under review, and the firm is collaborating with the DOE to move forward.

Other significant projects facing uncertainty include a plant being built by Orbia in Louisiana to produce lithium hexafluorophosphate, a vital battery electrolyte salt, and a facility planned in Georgia as part of a joint venture with Syensqo to manufacture polyvinylidene fluoride, a battery binder. Orbia’s CEO, Sameer Bharadwaj, expressed concerns during a recent investor call about the potential impact of the DOE grant reviews on their projects. Both initiatives had already faced delays due to slow electric vehicle adoption.

Loans for battery projects issued through the DOE’s Loan Programs Office (LPO) are also at risk. Eos Energy, a zinc-based long-duration battery company, closed a $306 million loan in December but is now facing a review of that funding. CEO Joe Mastrangelo reassured investors that they are in regular contact with the DOE as they navigate this process.

Aspen Aerogels canceled plans in February for a facility in Georgia that would have produced aerogel thermal barriers for batteries, having been conditionally approved for a $670 million loan through the LPO. The company has since decided to invest in smaller projects in Rhode Island, Mexico, and China. Similarly, Group14 Technologies, which aimed to start production at its Washington plant in 2024, is now waiting for clarity on Chinese tariffs, which have hindered its ability to engage with potential customers in China. CEO Rick Luebbe indicated that production might now begin in 2026.

Amprius Technologies, another silicon anode producer, announced in March that it would wait for changes in battery demand, costs, and tariffs before commencing construction on its Colorado plant, even considering abandoning the project altogether.

The challenges extend to companies involved in mining battery metals and refining them into chemicals. While some mining firms believe the administration’s focus on minerals may expedite production, others highlight that the lack of support for processing facilities could lead to a fragmented supply chain. Piedmont Lithium canceled plans for a DOE-supported lithium chemical facility in Tennessee last year due to low market prices, and Albemarle also delayed a significant lithium project for similar reasons.

Turner emphasizes that the slowdown in US battery materials investment is not solely a reaction to the current administration’s policies. The Inflation Reduction Act spurred a considerable number of new battery facility announcements, yet demand has not kept pace. For instance, Ascend Elements recently announced it would scale back its plans for a battery materials campus in Kentucky, returning a DOE grant due to insufficient demand.

Competition from established Asian firms further complicates the landscape for new entrants in the battery industry. While grants and tax credits were intended to help US firms catch up, many have struggled with technology implementation. ICL, which announced plans for an LFP cathode materials plant in Missouri, faced delays of at least 14 months due to challenges with its manufacturing technology.

Despite these setbacks, there are signs of optimism within the US battery industry. LG Energy Solution has opened an LFP battery plant in Michigan, and Toyota is preparing to launch a significant battery cell facility in North Carolina. As these projects progress, they could stimulate demand for more battery components in the US. “We are likely to see more projects moving forward despite the challenges,” Turner concludes. “Many players are working to navigate this uncertainty and plan for a transition in the industry, which may take longer than anticipated.”