This EV Battery Supplier Lost a $58 Million Grant. The Stock Sinks 27%.

American Battery Technology lost the Department of Energy grant last week. (American Battery Technology Comp)

Key Points

• American Battery Technology shares drop sharply after the Department of Energy cancels a $115 million project that would have split the cost equally.
• The Department of Energy terminates a grant for a battery cathode grade lithium hydroxide manufacturing facility.
• The company has appealed the termination of the agreement.

Shares of American Battery Technology plummeted Thursday after the Department of Energy canceled a $115 million agreement with the battery metal supplier amid a sweeping effort to slash clean-energy subsidies.

American Battery won a grant in 2022 to build and operate a manufacturing facility for battery cathode grade lithium hydroxide, a component in electric vehicles. Under the agreement, the Energy Department and American Battery would have split the cost equally, at about $58 million each.

But the Energy Department terminated the grant last week, American Battery said in a Securities and Exchange Commission filing. Around $52 million in reimbursable agency funds remain on the agreement, and the company itself already has raised over $52 million from public markets for the project, it disclosed.

The company has appealed the termination but intends to complete the project on time regardless of the final decision.

American Battery shares dropped 27% on Thursday, putting the stock on pace for its largest single-day decline since 2020, according to Dow Jones Market Data.

Through both regulatory actions and its sweeping tax-and-spending law, the Trump administration has slashed a vast array of Biden-era grants and financial assistance related to clean energy and electric vehicles.

The Energy Department announced earlier this month that it had terminated 321 awards for 223 projects, saving around $7.6 billion. The agency argued the projects “did not adequately advance the nation’s energy needs, were not economically viable, and would not provide a positive return on investment of taxpayer dollars.”

It wasn’t clear whether American Battery’s grant was part of those cuts. However, the agency said it had canceled awards from the Office of Manufacturing and Energy Supply Chains, which provided American Battery’s award.

Barron’s has reached out to the Energy Department for comment.

Write to Nate Wolf at nate.wolf@barrons.com