Sila lands $1.4B Pentagon loan as militaries demand more batteries

Sila, a U.S.-based startup, has secured a $1.4 billion loan from the U.S. Department of Defense to bolster its silicon-carbon battery material production. The loan was announced on Friday, as numerous U.S. battery purchasers, ranging from automotive firms to defense contractors, grapple with sourcing battery materials made outside of China.

Most lithium-ion battery anodes currently use graphite, and its supply chain is largely controlled by Chinese entities. Companies like Group14 and Amprius are exploring silicon anodes, which promise to store 20% to 40% more electricity than graphite anodes, leading to longer-lasting cells or smaller, lighter batteries - a highly desirable attribute for defense and mobility applications, including drones and electric vehicles.

Sila produces its silicon-carbon material at its factory in Moses Lake, Washington, setting it apart from most competitors. Despite starting operations in September, the current factory capacity can produce about 2 gigawatt-hours of anode material annually. Sila plans to expand the factory fivefold, enabling it to produce enough material for over 100,000 EVs.

In July, Sila raised $300 million to support the factory expansion, led by Atreides Management and Sutter Hill Ventures. To date, Sila has raised over $1.5 billion from private investors, as reported by PitchBook. The company has already secured deals with Mercedes and Panasonic. The Pentagon's new loan to Sila may open doors to contracts with defense companies, which have been securing substantial deals amidst ongoing wars in Iran and Ukraine.

In addition to the loan to Sila, the Department of Defense also announced deals with three other companies.