Defense Production Act: Accelerating US Battery Manufacturing
The Defense Production Act has emerged as a critical weapon in America’s arsenal for securing domestic battery manufacturing capabilities. With $3.2 billion invested across 222 projects since 2018, this Korean War-era law is being transformed into a modern instrument for energy independence and national security. As the United States confronts severe vulnerabilities in critical mineral supply chains—with China controlling approximately 80% of global lithium-ion battery manufacturing—the DPA represents more than policy; it embodies strategic necessity.
Understanding the Defense Production Act Framework
Originally enacted in 1950 during the Korean War, the Defense Production Act grants the President extraordinary authority to ensure the availability of industrial resources essential for national defense. The law operates through three primary mechanisms, each designed to address specific supply chain challenges.
Title I authorities enable priority ratings that require contractors to accept and prioritize government orders for essential materials and services. This provision proved invaluable during the COVID-19 pandemic when agencies placed priority ratings on critical supplies. Between fiscal years 2018 and 2024, federal agencies utilized this authority extensively to secure time-sensitive resources.
Title III authorities provide the most direct support for battery manufacturing through financial investments including purchases, purchase commitments, loans, and grants. These economic incentives reduce risk for suppliers establishing, expanding, or preserving production capabilities essential to national defense. The Department of Defense, Department of Health and Human Services, and Department of Energy collectively provided these 222 investments valued at approximately $3.2 billion to at least 182 U.S. industrial base companies.
Title VII authorities complement these direct investments by enabling industrial base assessments and establishing voluntary agreements that facilitate information sharing while providing protection from antitrust concerns. This framework allows government and industry to collaborate on supply chain challenges without legal barriers that might otherwise impede coordination.
Strategic Investments in Battery Materials Production
The Inflation Reduction Act fundamentally transformed DPA funding for battery manufacturing. Since mid-2023, the Department of Defense has awarded $250 million to twelve recipients utilizing IRA appropriations specifically targeting critical materials for large-capacity batteries. These investments directly support the objectives of the 2024 National Defense Industrial Strategy by establishing domestic manufacturing capability for reliable and sustainable supplies of strategic materials.
Graphite investments illustrate the strategic approach. Natural and synthetic graphite serves as a primary component in lithium-ion battery anodes used in stationary energy storage and electric vehicles. The Defense Department mounted a strategic response to rebuild America’s graphite production empire, recognizing that domestic capacity had eroded over decades. In July 2023, the Department awarded $37.49 million to Graphite One for securing a reliable, sustainable supply of domestic graphite materials north of Nome, Alaska. This award accelerated the company’s feasibility study by a full year, expediting decisions to advance the project toward comprehensive graphite production.
Additional graphite investments strengthened the emerging domestic supply chain. In November 2023, the Department awarded $3.18 million to South Star Battery Metals Corporation for conducting a feasibility study of the entire mining-to-production process for coated, spheroid purified graphite at the BamaStar Graphite Project in Coosa County, Alabama. These investments recognize graphite as foundational to battery anode production and address the reality that China dominates global graphite processing capacity.
Securing Critical Battery Metals
Cobalt and nickel represent particularly acute vulnerabilities in battery supply chains. In March 2024, the Department awarded $7 million to The Doe Run Resources Company to complete a demonstration-scale production run at its hydrometallurgical plant for separating cobalt and nickel at its facility in Viburnum, Missouri. This investment establishes a sustainable domestic processing facility capable of producing commercial-scale levels of cobalt and nickel used in numerous DoD systems. The strategic importance of this award extends beyond defense applications; cobalt and nickel are essential components in high-energy-density lithium-ion batteries powering electric vehicles and grid storage systems.
The Department further bolstered cobalt security with a $20 million award to Electra Battery Materials Corporation for establishing sustainable cobalt sulfate production. This investment strengthens domestic refining capacity for a material where the Democratic Republic of Congo controls approximately 70% of global production, creating significant geopolitical supply risks.
Manganese investments address another critical gap. The Department awarded $20 million to South32 for the Hermosa Project, which will sustainably produce battery-grade manganese in Santa Cruz County, Arizona. This marked the first DPA award specifically for manganese production, representing a significant step toward reducing import dependency throughout the battery material supply chain. Manganese serves critical functions in lithium-ion battery cathodes, particularly in nickel-manganese-cobalt (NMC) formulations that balance energy density, safety, and cost.
Lithium Production and Processing
Lithium represents the foundational element for lithium-ion battery technology. The Department awarded $11.8 million to Lithium Nevada Corporation, a subsidiary of Lithium Americas Corp, to accelerate extraction and processing of lithium carbonate. This investment directly supports the 2024 National Defense Industrial Strategy’s objective to expand domestic production of critical minerals and reduce dependence on foreign sources that may be unreliable or adversarial.
The lithium investment demonstrates the DPA’s role in addressing the full supply chain from extraction through processing. While the United States possesses substantial lithium resources, particularly in Nevada and North Carolina, converting these resources into battery-grade lithium compounds requires sophisticated processing capabilities that have largely moved overseas. The DPA investment aims to establish integrated domestic capacity spanning the entire value chain.
Advanced Cathode Materials
Cathode materials determine key battery performance characteristics including energy density, safety, and cost. In September 2024, the Department awarded $12.88 million to Nano One Materials Corp to demonstrate commercial-scale production of lithium iron phosphate (LFP) cathode active materials at facilities in Candiac, Québec and Burnaby, British Columbia. While these facilities are located in Canada, they support North American supply chain resilience and demonstrate the DPA’s recognition that allied production capacity strengthens collective security.
LFP batteries have gained significant market share particularly in electric vehicles and stationary storage applications due to their superior safety characteristics, longer cycle life, and lower cost compared to nickel-cobalt-based chemistries. However, China dominates LFP production with approximately 95% global market share. The Nano One investment addresses this concentration risk by establishing Western Hemisphere production capability using innovative manufacturing processes that reduce costs and environmental impact.
Building Energy Storage Infrastructure
In fiscal year 2023, $15.525 million was obligated to initiate a prototype Energy Storage Systems Campus that convenes fundamental understanding of raw materials availability within energy storage systems supply chains. This initiative optimizes current battery manufacturing through expanded existing production and new trusted battery foundries while accelerating next-generation energy storage systems to reduce reliance upon China and other states’ near-monopoly on critical minerals mining, processing, and battery manufacturing.
The Energy Storage Systems Campus represents a holistic approach to battery supply chain security. Rather than focusing solely on individual materials or manufacturing steps, it addresses systemic challenges spanning raw material availability, manufacturing optimization, quality assurance, and technology development. This campus model facilitates collaboration among government agencies, private sector manufacturers, research institutions, and allied nations to accelerate innovation and production scale-up.
Additional investments planned for fiscal year 2024 support the Department’s requirements to procure and field large-capacity batteries across military applications. These range from tactical energy storage for forward operating bases to electric vehicle batteries for non-tactical transportation to grid-scale storage supporting military installations. The diversity of applications underscores how battery technology has become foundational to modern military operations and the importance of secure, reliable domestic supply chains.
Workforce Development for Critical Minerals
Production capacity means little without skilled workers to operate advanced facilities. The Department awarded $6.56 million to Montana Technological University for developing and delivering a critical workforce development program. This initiative allows trainees to upskill their capabilities in metallurgical, geological, mining, and environmental engineering. The project directly bolsters the 2024 National Defense Industrial Strategy’s aim to expand support for domestic critical minerals production and prepare the workforce for future technological innovation.
Anthony Di Stasio, Director of the Manufacturing Capability Expansion and Investment Prioritization (MCEIP) directorate, emphasized that “the dearth of individuals with the requisite skills in mining and metallurgy is one of the largest bottlenecks for our Nation’s ability to increase its critical mineral production capacity.” This workforce investment recognizes that physical infrastructure alone cannot solve supply chain vulnerabilities; human capital represents an equally critical constraint.
The Montana Tech program addresses multiple workforce challenges simultaneously. It trains new professionals entering the field, upskills existing workers to handle advanced technologies and processes, and creates pathways for veterans and displaced workers to transition into critical minerals careers. The program’s focus on environmental engineering reflects the modern reality that sustainable practices are essential for maintaining social license to operate and ensuring long-term viability of domestic mining and processing operations.
Presidential Authority and Strategic Direction
President Biden issued presidential determinations providing the Department of Energy with authority to utilize the Defense Production Act to accelerate domestic production of five key energy technologies including solar, transformers and electric grid components, heat pumps, insulation, and electrolyzers, fuel cells, and platinum group metals. These determinations are part of the Biden-Harris Administration’s plan to lower energy costs for families, strengthen national security, and achieve lasting American energy independence that reduces demand for fossil fuels and bolsters the clean energy economy.
Deputy Secretary of Defense Dr. Kathleen Hicks emphasized the national security imperative: “Reducing America’s dependence on gas and oil is critical to U.S. national security. In conflict, fossil fuel supply lines are especially vulnerable. The actions President Biden announced today will help strengthen our supply chains and ensure that the United States is a leader in producing the energy technologies that are essential to our future success.”
These presidential determinations waived the DPA Title III $50 million statutory ceiling for supply chains enumerated in key reports including the June 2021 White House report “Building Resilient Supply Chains, Revitalizing American Manufacturing, and Fostering Broad-Based Growth” and the February 2022 DoD report “Securing Defense-Critical Supply Chains.” The reports identified critical vulnerabilities in electronics, kinetic capabilities, castings and forgings, minerals and materials, and power and energy storage.
Addressing Decades of Industrial Base Erosion
Over the last few decades, the U.S. has seen the sourcing of a large number of critical materials shift overseas. Variable demand, price competition, and multiple other economic forces resulted in the need to source many critical materials from foreign, often adversarial, nations. These DPA awards reduce reliance on foreign sources and mitigate severe defense industrial base risks.
The erosion of domestic battery manufacturing capability occurred gradually over decades. China implemented a coordinated national strategy to dominate battery supply chains beginning in the 1990s, providing state subsidies, building integrated industrial clusters, and securing access to critical mineral resources worldwide. By the time U.S. policymakers recognized the strategic implications, China had established commanding leads across the entire value chain from mining through cell manufacturing.
The DPA investments represent a strategic effort to reverse this decline. Rather than attempting to replicate China’s vertically integrated approach, U.S. strategy emphasizes establishing sufficient domestic and allied capacity to ensure supply security while maintaining market competition and innovation. The focus on North American supply chains—including Canadian projects—reflects recognition that allied production strengthens collective resilience without requiring complete self-sufficiency.
Integration with Broader Industrial Policy
DPA investments operate within a broader framework of industrial policy supporting battery manufacturing and clean energy. The Inflation Reduction Act appropriated $500 million of supplemental funding for “enhanced use of the Defense Production Act,” with DoD receiving $250 million applied to expanding capabilities for domestic mining, mineral processing, and related industrial sectors for large-capacity batteries and other critical material shortfalls identified in reports pursuant to Executive Order 14017.
As of the end of fiscal year 2023, $127.445 million of these funds had been obligated, with an additional $114.377 million of projects in acquisition, leaving $8.178 million for additional investments in fiscal year 2024. This systematic deployment ensures strategic allocation across the full spectrum of battery supply chain vulnerabilities rather than fragmentary responses to individual shortfalls.
The CHIPS and Science Act complements DPA battery investments by supporting semiconductor manufacturing essential for battery management systems, power electronics, and electric vehicle control systems. The Infrastructure Investment and Jobs Act provides funding for electric vehicle charging infrastructure and grid modernization that will drive battery demand and justify private sector manufacturing investments. Together, these policies create a comprehensive framework for rebuilding America’s energy and industrial base.
Challenges and Lessons Learned
Agencies experienced various challenges when using DPA authorities. GAO’s prior work found difficulties tracking Title I priority rated contracts during the COVID-19 response. The Government Accountability Office made four recommendations in 2020 and 2021, with agencies taking action to address all but one. Additionally, the DPA government-wide coordinator, currently the Federal Emergency Management Agency, has not collected and shared lessons learned from DoD’s extensive use of Title III over multiple decades, though doing so could benefit other agencies.
The rapid expansion of DPA funding—from $53.6 million in fiscal year 2019 to $1 billion in fiscal year 2020 due to COVID-19 emergency appropriations—revealed both the flexibility of the authority and implementation challenges. Agencies struggled with sudden scale-up, unfamiliar acquisition mechanisms, and coordination across organizational boundaries. The experience highlighted the need for sustained capability and expertise in DPA administration rather than emergency improvisation.
For battery manufacturing specifically, challenges include the long lead times between investment and production, technical risks in scaling emerging technologies, market volatility affecting project economics, and competition with heavily subsidized Chinese production. Success requires sustained commitment beyond initial awards, including ongoing technical support, market analysis, and policy stability that provides confidence for private sector co-investment.
Future Trajectory and Strategic Outlook
The FY 2025 budget reflects the Department resourcing the DPA Fund so the program can address critical shortfalls in the domestic industrial base in areas such as critical chemicals, hypersonic applications, turbine engines and rocket motors, electronics, space, rare earths, and small unmanned aerial systems. Battery and energy storage investments continue as a priority within this broader portfolio.
Congress reauthorized the DPA through September 30, 2025, meaning most provisions will expire without further action. The demonstrated value of DPA authorities for battery manufacturing and other critical supply chains suggests strong support for reauthorization. The question is not whether the DPA will continue but how it will evolve to address emerging challenges including artificial intelligence hardware, quantum computing, advanced manufacturing technologies, and next-generation energy storage systems.
The battery manufacturing investments made under DPA authority will bear fruit over the coming decade as projects progress from feasibility studies through demonstration facilities to commercial production. Success will be measured not just in tons of materials produced but in creating resilient supply chains, developing domestic technical expertise, establishing manufacturing ecosystems that support innovation, and demonstrating that democratic nations can compete effectively in strategic industries without adopting authoritarian industrial models.
Implications for American Energy Independence
The Defense Production Act’s role in battery manufacturing transcends military supply chains. Batteries enable the clean energy transition by storing intermittent renewable energy, powering electric vehicles that reduce petroleum dependence, and supporting grid modernization that improves resilience and efficiency. Every battery manufactured domestically using American or allied minerals reduces vulnerabilities to supply disruptions and geopolitical coercion.
For American Li-ion and similar companies operating advanced battery recycling facilities in the United States, DPA investments in primary production complement recycling’s role in securing domestic supply chains. As the installed base of lithium-ion batteries grows over the next decade, recycling will provide an increasingly important source of critical materials. The combination of new mining and processing capacity supported by DPA with growing recycling operations creates a hybrid supply system that balances primary and secondary sources.
The strategic vision is clear: America’s energy independence requires secure access to the minerals, materials, and manufacturing capabilities that power electric vehicles, renewable energy systems, and advanced electronics. The Defense Production Act provides proven legal authority, flexible mechanisms, and demonstrated capability to mobilize industrial resources for national priorities. Its application to battery manufacturing represents not a departure from the DPA’s original purpose but a natural evolution to address 21st-century national security challenges where energy technology has become as strategically important as traditional military hardware.
The path forward demands sustained commitment, strategic coordination across government agencies, partnership with private sector innovators, and recognition that building domestic battery manufacturing capacity is a marathon rather than a sprint. The investments being made today through DPA authority will determine whether America leads in the industries that will define economic competitiveness and national security for generations to come.
