DOE Plan Endangers Billions for GM, Ford, and Startups

The Department of Energy is planning to claw back or cancel billions in previously announced clean manufacturing grants, leaving marquee automakers and a swath of climate-tech startups on shaky ground. Companies including General Motors and Ford would have projects put on hold, downsized or scrapped if the plan advances, as would smaller innovators of materials and grid hardware.

Automakers Face Costly Retooling Setbacks as Grants Are Cut

General Motors stands to lose $500 million or more intended for the Lansing Grand River Assembly Plant in Michigan, funds meant to facilitate the plant’s transformation into a maker of electrified vehicles with hybrid components. The grant was made available under the Domestic Manufacturing Conversion program, a component of a larger DOE initiative to inoculate U.S. auto plants from changes in demand and maintain jobs associated with next-gen drivetrains.

Ford and Stellantis projects would also be targeted, according to people familiar with the draft cuts. Though not every single award had been fully obligated, automakers built timelines and union contracts around these conversions. Withdrawing money at this point in the process would probably delay the launch of models, increase costs for tooling plans and weaken a cushion planned to guard against global supply-chain shocks.

Battery Supply Chain Exposure Threatens Domestic Projects

A proposed rollback would be aimed at grants designed to advance local production of key battery ingredients. Anovion, an Illinois-based company that is one of those chosen to receive a nine-figure DOE investment in domestic synthetic graphite capacity for lithium-ion anodes, is among the companies affected. The United States is heavily reliant on imports for nearly all natural graphite, and companies like Graphite One and Alabama Graphite have been working to change that, although Chinese companies are major suppliers of both natural and synthetic processed products, according to the U.S. Geological Survey.

Recycling is not spared. The company Li Industries received $55.2 million from the Bipartisan Infrastructure Law to recycle LFP batteries — and it could see development momentum slowed just as automakers are ramping up production of LFP chemistry in cost-sensitive models. The Energy Information Administration and independent industry analysts have identified grinding battery-grade graphite and LFP precursor supply chains as chokepoints to U.S. EV growth this decade; losing these projects would further constrict those bottlenecks.

Cement And Industrial Decarbonization In The Gun Sights

The list is heavy with industrial projects. Brimstone’s $189 million award to construct a first-of-its-kind plant to produce lower-carbon Portland cement and alumina and associated materials is set to be revoked. Sublime Systems, working to create an electrochemical route to ultra-low-carbon cement, is on the verge of losing an $86.9 million grant. Investors are looking for these struggling new companies to prove that they are real businesses rather than one-hit wonders or vaporware. Furno, which is developing a modular cement kiln, would lose $20 million for a Chicago demonstration plant.

The stakes are outsized: cement alone accounts for about 7 percent to 8 percent of the world’s carbon dioxide emissions, according to International Energy Agency and academic estimates. First-of-a-kind, commercial-sized demonstrations are necessary to reduce cost and confirm performance. Shutting down these plants means that budding technologies could be pushed back into the pilot phase, at a time developers need bankable proof of concept at scale.

The cuts also hit those who try to innovate in efficiency for building uses. Makers of high-performance insulation CleanFiber and Hempitecture stand to lose $10 million and $8.4 million, respectively. Skyven Technologies, which uses industrial heat pumps, could lose $15 million, and advanced window maker Luxwall stands to see $31 million evaporate. All aim to address hard-to-abate energy use inside factories and buildings, where much of the emissions reductions will come from numerous discrete upgrades rather than a single blockbuster project.

Grid Upgrades Meet Surging Data Center and Clean Energy Demand

Perhaps most counterintuitive is the threat to cut $28.2 million for TS Conductor. The company’s high-capacity conductors can double or even triple the carrying capacity of existing transmission lines through a process called “reconductoring,” which would be faster and cheaper than constructing new corridors. Both the DOE’s Grid Deployment Office and utility studies have identified advanced conductors as a high-impact near-term upgrade.

The timing is awkward. Utilities are seeing a surge in interconnection requests from data centers, semiconductor fabs and clean-energy projects. Industry research has warned that data center load could grow at double-digit annual rates, and reconductoring is among the few tools available to relieve congestion within years rather than decades. It would add to queues and slow local growth plans if this support is withdrawn.

Policy Whiplash and Legal Questions Around DOE Grant Cuts

The proposed cuts come as part of a broader rethinking of industrial policy set in motion by recent laws, such as the Bipartisan Infrastructure Law and the Inflation Reduction Act. Agencies are allowed to stop negotiations or de-obligate money that is not yet under contract, but rescinding appropriated budget authority typically means inviting oversight under the Impoundment Control Act, according to the Government Accountability Office. For awards that are already under cooperative agreements, the government generally has “termination for convenience” rights, but cancellations might face legal challenges and political backlash.

Trade groups that represent automakers, makers of building materials including insulation, and grid equipment suppliers are poised to make the case that these grants help support U.S. jobs, energy security and long-range cost reduction. Researchers at Rhodium Group, among other research organizations, have found time and again that early federal cost-sharing can unleash multiples in private capital — momentum that is hard to rekindle if lost.

What to Watch Next as Agencies and Congress Weigh Cuts

The DOE can fine-tune or reverse the proposed cuts after its interagency and internal reviews, and Congress could also have a say if rescissions end up occurring. Companies will scramble to shore up alternative financing or bridge scopes to maintain schedules. The bottom line is a harsh one: To withdraw now would delay domestic EV retooling, undermine battery and materials supply chains, paralyze cement decarbonization, and worsen grid congestion just as new loads come online. That is a cost of delay that may outweigh headline savings.