Battery Startups Attract Capital as Investors Pull Back From AI

Investors are shifting funds from AI to startups developing batteries and battery-powered technologies. According to Sina Finance, Harbinger Motors announced a $240 million Series D funding round on Thursday to expand product lines, including hybrid autonomous vehicles for the U.S. Army. On the same day, the U.S. Department of Defense announced a conditional $250 million loan to battery materials company 6K to support construction of a plant in Jackson, Tennessee, producing nickel-based cathode materials. The two deals had been in development for months and were announced as AI stocks suffered a sharp decline on Thursday. They reflect investor interest moving toward areas adjacent to AI rather than AI core businesses, including battery-powered drones, humanoid robots and commercial electric vehicles such as Harbinger’s. Other recent investments include a $450 million conditional Defense Department loan on Monday to combat-drone maker Neros Technologies for a vertically integrated plant in Torrance, California. On October 26, electric construction equipment company Bedrock Robotics raised $600 million in a Series C round at a post-money valuation of $4.1 billion to expand its excavator business. Investment from private capital and the federal government has reversed a four-year downturn for battery-related startups that followed the 2020 and 2021 investment boom in batteries and electric vehicles. David Howell, vice president of battery-industry lobbying group Strategic Marketing Innovation and a former senior Energy Department official, said large Defense Department investments reflect a strategy to build a domestic supply chain. He said private investors are also seeking new opportunities as the AI sector becomes saturated. Harbinger CEO John Harris said the new funding will expand several product lines and increase production of autonomous military vehicles. He said the vehicles can carry more cargo and cost less than traditional crewed military vehicles that require added armor. Harris criticized the traditional approach of making military vehicles faster, larger and more heavily armored, saying it doubles cost, size and weight while halving payload. He called it a “faster horse” mindset. Autonomous vehicles can be lighter without heavy armor, leaving more power for sensors, radar and other electronics. Harris said military logistics is fundamentally a power-system problem. The 6K loan targets a longstanding gap in battery materials funding. In the past, government and private investment largely went to battery packs and cell assembly, with little directed to startups developing core materials. Investors and the government largely overlooked startups working on domestic cathode production, although cathodes are a battery’s core and most expensive component. Tesla processes lithium and makes some cells, but relies almost entirely on imported cathode materials. 6K CEO Sourabh Ural said the loan will fund a plant in Jackson, Tennessee, with a goal of producing 1,000 metric tons of cathode powder annually by 2028, enough for batteries for 10,000 electric vehicles. The company aims to expand capacity to 13,000 metric tons by 2030. Under its agreement with the Defense Department, 6K must raise an equal $250 million in private capital. Ural said the government loan will help the company raise that funding. He said he believes investors are beginning to view batteries as an allocation and a long-term investment the country needs.