The Pentagon is endorsing the creation of new tax credits and a “balanced” approach to allow U.S. companies to license foreign intellectual property from allies for the equipment used to make batteries, according to a report released to industry this week.
The measures in the new report obtained by POLITICO represent an effort to challenge China’s dominance in the sector and develop a U.S. supply chain for the machines used to produce advanced batteries — equipment the Pentagon sees as crucial for powering military vehicles and drones.
But the recommendations also come after the Trump administration and Hill Republicans gutted a range of clean energy tax credits and cracked down on the use of foreign IP for battery manufacturing in last year’s One Big Beautiful Bill Act.
The Pentagon study lands as the U.S. has seen a surge in domestic manufacturing of batteries that are increasingly being used to support the electrical grid and power critical technologies like data centers.
