Batteries: A Strategic Asset for National Security

The battery narrative largely focuses on electric vehicles (EVs) and electronics, but batteries also play a pivotal role in defense applications, a segment that is becoming key amid heightened geopolitical tensions.

From emergency response equipment and communications infrastructure to broader government applications, policymakers are increasingly prioritizing domestic battery output in an effort to strengthen industrial resilience.

That shift is creating a new demand driver for battery materials and accelerating investment across the value chain, particularly in North America and Europe, where governments are seeking to reduce dependence on China.

According to a 2023 report, a US soldier deployed for a 72 hour mission carries anywhere from 15 to 20 pounds of batteries, used to operate a variety of equipment, including radios, rifle scopes, night-vision goggles and GPS.

There are roughly 1.32 million active duty members in the US, which theoretically could require 19.8 million pounds of batteries. That does not include the batteries used in drones and other military applications.

Speaking with the Investing News Network (INN), Cormac O'Laoire, managing director of Electrios Consultants, said the conversation around batteries has changed dramatically over the past year, with governments placing greater emphasis on secure domestic supply chains. Previously, they were treated as low-priority commodities similar to household remote control batteries. However, they have recently taken on new life.

“Over the last 12 months, batteries have been classified as munitions, meaning ammunition," he said.

"So batteries are right there next to bullets and missiles. And what does the army need? Munitions. They need a lot of it, but you usually can't buy off your adversary," the expert added.

O'Laoire went on to explain that the US Department of War has introduced programs alongside the National Defense Authorization Act to change how battery cells are sourced, explicitly banning procurement from China.

Unlike the EV industry, which uses terms like "foreign entity of concern," the Department of War directly names China and prohibits sourcing cells or battery systems from the country between now and 2031.

Money is following the mandate. The Department of War's Drone Dominance Program, a roughly US$1.1 billion initiative, aims to field more than 300,000 domestically produced attack drones by 2028 with no Chinese components.

O'Laoire calls it a "cash infusion" the battery sector badly needed. The pricing gap illustrates why — EV battery packs run around US$120 per kilowatt-hour, he noted, while comparable aerospace and defense-grade cells fetch roughly US$11,000 per kilowatt-hour. "Cost is secondary to mission success," he said.

Those drones, along with car-sized unmanned aerial and marine vehicles, as well as the disposable first-person-view attack drones soldiers now fire, mostly run on nickel-manganese-cobalt (NMC) chemistry rather than the lighter, cheaper lithium-iron-phosphate (LFP) cells common in EVs because NMC packs more energy into less weight.

But defense demand is inherently erratic.

"You don't know when there's going to be a war," O'Laoire said. "So you can't really stockpile batteries."

The policy shift reflects a broader recognition that batteries are no longer simply an industrial product, but also an enabling technology that supports a growing range of strategic applications. It has also reinforced the importance of developing domestic manufacturing capacity, particularly for lithium-ion batteries.

While EVs remain the largest source of battery demand, government-backed initiatives could provide an additional catalyst for investment across the sector.

"There's the capital ... that's really going to spur a lot of development in this sector," O'Laoire said, adding that innovations developed through government-supported programs could ultimately find their way into commercial battery technologies over the next decade. The growing emphasis on domestic manufacturing comes as western governments continue to grapple with China's dominance across the battery supply chain.

According to the International Energy Agency and Fastmarkets, China accounts for the majority of global processing capacity for battery materials and cell manufacturing, leaving other regions heavily reliant on imported products.

Building alternative supply chains, however, remains a significant challenge.

O'Laoire said one of the biggest obstacles lies in the battery midstream, where companies process raw materials into cathode and anode materials before cells are manufactured.

"The big problem in getting midstream investment is there's no experience," he explained. "You're taking a chance investing in companies that ... might have modeled their project wrong ... they've never done it before."

Even experienced Asian manufacturers have encountered difficulties establishing processing facilities outside China because of workforce shortages, supply chain constraints and the challenge of sourcing raw materials competitively.

As a result, attracting private investment remains difficult to find despite growing policy support.

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.