Sila Lands $1.4B Pentagon Loan to Expand U.S. Battery Material Production

Sila has secured a $1.4 billion loan from the U.S. Department of Defence to expand domestic production of its silicon-carbon battery material as demand for batteries grows across the automotive and defence industries.

The financing comes as U.S. companies look for alternatives to battery materials produced in China. Most lithium-ion batteries currently use graphite in their anodes, and Chinese companies dominate much of the global graphite supply chain.

Sila is among several companies developing silicon-based alternatives. Silicon anodes have the potential to store roughly 20% to 40% more electricity than conventional graphite anodes, which could enable longer-lasting batteries or allow manufacturers to build smaller and lighter battery packs.

Those characteristics are particularly attractive for electric vehicles and defence applications such as drones, where reducing weight while increasing available energy can significantly improve performance.

Sila expands its Washington battery factory

Sila produces its silicon-carbon material at a manufacturing facility in Moses Lake, Washington, giving customers access to a U.S.-made source of anode material that is less exposed to tariffs and geopolitical supply-chain risks.

The factory began operations in September and currently has the capacity to produce approximately 2 gigawatt-hours of anode material annually.

Sila is now working to expand the Moses Lake facility by about five times. Once completed, the expanded plant is expected to produce enough material to supply batteries for more than 100,000 electric vehicles.

The Pentagon loan follows a $300 million funding round Sila completed in July to support the same expansion. Atreides Management and Sutter Hill Ventures led that financing.

Sila has raised more than $1.5 billion from private investors to date, according to PitchBook.

Defence demand could create new opportunities

Sila has already secured commercial agreements with Mercedes and Panasonic. The Department of Defence financing could also help the company build relationships with defence contractors seeking domestically produced battery materials.

Demand for batteries has become increasingly important for military equipment, particularly drones and other systems that require high energy density without adding excessive weight.

The Sila financing was announced alongside three other Department of Defence investments aimed at strengthening domestic and allied supply chains for strategically important materials.

Australian company Sunrise Energy Metals will receive a $400 million loan to develop scandium, a rare earth element used in lightweight alloys.

Minnesota-based Niron Magnetics secured a $150 million loan to expand production of rare earth-free magnets that can be used in products ranging from smartphones and electric motors to missiles.

The government is also making an $85 million equity investment in Strategic Bauxite, a company that mines bauxite, the mineral used as the primary source of aluminium.

Together, the investments reflect a broader U.S. effort to develop domestic and allied sources of materials considered important for batteries, defence systems and advanced manufacturing while reducing dependence on Chinese supply chains.