Renewable Energy Manufacturing Trends and Demands

The U.S. solar manufacturing and supply chain and the industry at large saw major gains in 2025, but they face an uncertain market heading into 2026.

According to the Solar Energy Industries Association, the U.S. can now produce “every major component of the solar supply chain” with growth across multiple categories. This included a 300% increase in solar cells and a 37% increase in solar module production, bumping capacity beyond 60 gigawatts, between the end of 2024 and late 2025.

Despite those gains, some experts say the industry is still far from supplying what the domestic market requires. And the crosswinds of sunsetting tax credits, increased eligibility thresholds and tariffs create a difficult environment for business decisions.

“You’ve seen pretty distinct growth and investment, particularly on the module side. You’ve seen more of it on the cell manufacturing side in the last five years, thanks to tax credits. But we still have a long way to go as an industry in terms of reshoring the rest of that sector,” said Scott Moskowitz, vice president of market strategy and public affairs at manufacturer Qcells.   

President Donald Trump’s One Big Beautiful Bill Act is among the top uncertainties that could slow momentum. 

OBBBA accelerates the phase-out of the Investment Tax Credit for solar projects started after 2027 and increases content requirements for the Domestic Content Bonus. While the bill maintains the Section 45X Advanced Manufacturing Production Credit for solar manufacturers, it also sets new exclusions to businesses with connections to Foreign Entities of Concern.

On the other hand, Trump’s widely publicized tariffs introduce a level of market protection that may shield companies from international competition.

Experts say these conflicting political decisions are causing collateral damage to the solar industry.

“Unfortunately [OBBBA] got caught up in an ideological back and forth. People started to pick on technologies that they felt had been favored — the solar, the wind,” said Mike Carr, executive director of the Solar Energy Manufacturers for America Coalition.

The road to reshoring

Until recently, support for U.S. solar manufacturing has been largely bipartisan, supported by trade policy and tax credits. “We are on our fourth straight presidential administration of relatively, I wouldn't call it consistent, but generally support of using trade policy as a tool to support manufacturers,” said Moskowitz.

Trump’s first administration offered the first of such beneficial conditions via the Section 201 safeguard, imposed in 2018. This allowed the U.S. to enact temporary tariffs on a wide range of products when imports surged.

In response, Qcells made its first investment in the U.S. with the opening of a $200 million solar panel manufacturing facility in Dalton, Georgia. The facility was the largest of its kind in the Western Hemisphere at the time. 

“It was really the kind of market protection that they felt like they had been lacking for a long time,” said Carr. “And it was enough to kind of begin to really think about what a reshoring effort could look like.”  

Under President Joe Biden, the Inflation Reduction Act established the Section 45X tax credit and expanded and extended the ITC, offering 30% credit for solar projects through 2032.

Martin Pochtaruk, CEO of solar panel manufacturer Heliene, said the credits and resultant market growth directly helped his company secure a $150 million investment for its new Rogers, Minnesota manufacturing line in 2024. 

However, the accelerated phase-out of the ITC and modification of 45X under OBBBA threatens the momentum of such crucial efforts to grow production capabilities. 

“We took a pretty substantial hit to manufacturing when they prematurely phased out the ITC for solar, and importantly, from our perspective, the domestic content incentive that went with it,” said Carr. “It reintroduced uncertainty into a fairly certain equation.” 

A three-legged stool approach

In the wake of the COVID-19 pandemic, manufacturers are more eager than ever to localize their production networks. 

“We learned a lot as an economy during the pandemic, when supply chains were tested,” said Moskowitz. “We learned that no industry, and particularly a critical industry like energy, wants to be dependent on imported products if they don't have to be.”

Business leaders say reversing certain tax credits while advancing tariffs has created a precarious situation.

“Tariffs are not a particularly nimble approach. It takes time for them to be effective. There’s a lot of lobbying against them,” said Carr. “And they’re often time-limited, even in their implementation. Even the [Section] 201 tariffs that started in 2018 were due to expire by 2021, right? That's not the kind of time frame that allows for scale investments.” 

Those provisions, which enabled Qcell’s $200 million investment, were ultimately extended for four years, but the shifting policy landscape remains challenging.

ording to Carr, reshoring U.S. solar manufacturing demands a three-legged stool approach: tariffs for market protection, supply-side policies to enable multibillion-dollar investments and a domestic content incentive.

Chopping off one leg — by accelerating the sunset of a domestic content incentive that stimulated demand for American-made parts — forces the industry to rely on shifting tariffs and supply-side policy. 

Limits of the current domestic supply chain

Still, there’s no denying that domestic solar manufacturing is on the rise. Corning’s newest hub in Michigan, which aspires to “grab up to 15% of the U.S. market for wafers” — in addition to Nextpower’s Tennessee expansion — proves that both upstream and downstream production is in demand.

But while each individual part of the solar manufacturing sector exists in the U.S., there is not enough to meet all of the current domestic demand, said Moskowitz. 

Pochtaruk echoed the idea, saying the U.S. may have successfully reshored the entire solar supply chain, but “it’s far from supplying what the market requires.”

“Corning’s amazing factory is [now] in place, but it’s just starting up,” said Pochtaruk. He added that the market will still require imports to supplement production.

Corning has not confirmed the plant’s size, though some analysts approximate a 2.5GW capacity. 

Experts agree that policy stability would help with growth, especially when it comes to justifying major investments that might take up to 10 years to amortize, said Pochtaruk.

Referring to Corning’s Michigan factory, he said, “What was the investment? $900 million? You invest that for a long, long time. It’s not just one four-year cycle.” Corning ultimately increased its investment to $1.5 billion, further extending the amortization timeline. 

“This market takes a long time to develop, and it takes a while to build a new factory and for the sales channels to develop,” said Carr. “The biggest thing that has been tough for this industry is the on-again, off-again nature of policy support around it.”

With demand for power skyrocketing and solar widely considered the cheapest form of energy, Carr said the question isn’t whether solar-powered electricity will be in demand or desired, but how much the U.S. will contribute to its production.

“It’s going to continue to be used in our economy. It is, to a certain extent, an inevitability. What's not inevitable is that we make it,” said Carr. “Do you want to allow reshoring? Or are you comfortable with these kinds of products being made by a sometimes hostile power, or at the very least a trade competitor? We’ve heard from policymakers on both sides of the aisle a resounding ‘no.’”

With Corning’s Michigan silicon ingot and wafer factory now online, the United States can produce all major components of the solar supply chain, the Solar Energy Industries Association said in a release.

SEIA also said that since the end of 2024, domestic manufacturing capacity has increased “across every major segment of the solar and storage supply chain,” and as of September 2025, the U.S. has surpassed 60 GW of domestic solar module production capacity – a 37% increase from December 2024.

“The surge in production of downstream components like modules has ensured there is sufficient demand for upstream manufacturing,” SEIA said. “Since the end of 2024, U.S. solar cell production capacity has more than tripled, rising from 1 GW to 3.2 GW.”

Hemlock Semiconductor and its parent company Corning announced the ingot facility in October 2024, a few days after the U.S. Treasury Department issued final rules for the CHIPS and Science Act clarifying that solar ingot and wafer production facilities and equipment qualified for its 48D 25% investment tax credit.

“This quarter, we expect to move from producing thousands of wafers a day to more than 1 million a day,” Corning CEO Wendell Weeks said during a company earnings call. “So needless to say, this is an exciting and stimulating time for us. As we've shared, we have committed customers for more than 80% of our capacity for the next five years.”

Weeks said the company will be “applying our advanced manufacturing capabilities to establish ourselves as the global low-cost producer even as we're based in the U.S.”

The U.S. solar manufacturing pipeline includes 23 GW of solar module capacity, over 34 GW of solar cell capacity, 25 GW of inverter capacity and 95 GWh of battery cell capacity, SEIA said.

SEIA noted that U.S. manufacturing of inverters has grown by nearly 50% since the end of 2024, with capacity surging from 19 GW to 28 GW. 

In addition, U.S. mounting system manufacturing grew 14% and added 23 new factories since the end of 2024, SEIA said.

However, the group said it has concerns that the Trump administration’s “policies, regulations, and trade actions which have contributed to industry uncertainty” might dampen domestic demand and manufacturing growth.

Sponsored content

By Enel North America

Manufacturers, as heavy energy users, are under growing pressure to rethink their energy use, manage costs and meet sustainability expectations. While efficiency upgrades, electrification and renewables get a lot of attention, an affordable and effective solution is often overlooked: demand response.

Demand response programs pay big energy users to cut back when the grid is stressed. The results? Reduced emissions and operating costs while supporting the clean energy transition. It’s a simple concept that can make a big impact: by adjusting energy use for a few hours a few times a year, manufacturers stand to gain financial and environmental benefits.

Sustainability has become both a competitive differentiator and a core business requirement, and demand response offers manufacturers an immediate, low‑barrier way to make a measurable impact.

Why grid operators value demand response

When the grid faces high demand, it has traditionally relied on peaker plants to supply extra power. However, these plants are expensive to maintain and operate, and they are usually powered by fossil fuels. A better option for the grid is to leverage flexible capacity from large energy users – the most straightforward solution to addressing peak demand is to reduce that demand.

And with energy demand forecasts surging, using existing resources more efficiently – while supporting the rollout of clean energy on the grid to provide capacity – has never been more essential.

Demand response recognizes the value of when electricity is used. Instead of firing up a peaker plant, the grid pays demand response participants to temporarily reduce consumption, maintaining system balance at a fraction of the cost and carbon footprint. By shifting or reducing load during times of grid stress, manufacturers support greener peak capacity and reduce their own emissions.

How demand response supports decarbonization goals

Demand response is a low‑cost, low‑barrier solution to boosting sustainability. Unlike many capital‑intensive projects, it requires minimal new infrastructure and manufacturers can be ready to participate in a matter of weeks. Demand response leverages the flexibility of existing assets, and most manufacturing facilities have operational flexibility, whether they realize it or not.

LED lighting, HVAC systems, chillers, motors and compressors can all be adjusted manually or orchestrated through control/automation systems to make demand response participation easy and effective. Simple strategies such as dimming non-essential lighting, adjusting HVAC set points, shifting production schedules or temporarily reducing process loads can create a highly effective demand response plan.

Sustainability benefits unlocked with demand response

By optimizing energy use, boosting efficiency, integrating renewables and improving grid reliability, demand response is playing a crucial role in the transition to a more sustainable energy future:

• Reduce carbon emissions: Participating in demand response reduces a facility’s carbon footprint by enabling more efficient energy use and avoiding energy from the grid when fossil fuels are burned to power peaker plants. Energy reductions translate into kW or even MW that can be directly attributed to carbon reduction efforts while earning revenue.
• Integrate renewable energy resources: Renewable energy is essential to the energy transition, and as more renewables integrate into the electric grid, demand response is becoming an increasingly important tool to help the grid remain balanced. The grid can deploy demand response quickly – in under a second or within minutes – to address and mitigate grid intermittencies caused by variations in renewable sources like wind and solar.
• Support local communities and a more resilient grid: Demand response programs help maintain affordable, reliable electricity. They are also a cleaner, more cost-effective alternative to building new peaker plants in the community – or relying on existing ones. Participation directly contributes to greener peak capacity on the grid, helps with grid reliability and efficiency to avoid costly blackouts and keeps energy prices stable for all.
• Drive efficiencies with real-time data: Participating in demand response enhances awareness of energy infrastructure, enabling manufacturers to identify efficiency opportunities and create new consumption behaviors. Metering devices can unlock access to real-time energy usage and demand response performance data. By monitoring and controlling energy consumption levels in real time, facilities can optimize energy use and maximize demand response performance.

Conclusion 

Demand response is a win-win. It helps create a cleaner, more sustainable grid and offers clear financial and carbon-cutting benefits for manufacturers. By making energy flexibility a key part of their strategy, manufacturers can score quick wins while moving forward on their decarbonization plans.

However, effective participation means navigating complex market rules and program details. A qualified demand response provider, such as Enel North America, can help ensure compliance, boost value and align participation with wider sustainability goals.

Gov. Gavin Newsom signed AB 1280 into law on Oct. 8. The legislation will provide financing for manufacturers looking to adopt thermal energy storage systems and heat pumps for their operations.

AB 1280, introduced by Democratic Assembly member Robert Garcia, expands the types of decarbonization projects considered eligible for financial incentives under programs like the California Energy Commission’s Industrial Decarbonization and Improvement of Grid Operations program.

The state bill would also set labor and community benefit requirements before projects are approved for financing.

California’s INDIGO program, created in 2022, provides incentives for industrial projects that benefit the electrical grid, reduce emissions and improve air quality, according to its website. Earlier in 2025, Sierra Nevada Cheese received a $5.5 million loan from the program to install an anaerobic digester, linear generator and other equipment to lower emissions from its cheese plant. 

 

The bill, which passed the Senate unanimously on Sept. 9, will make thermal energy storage technology eligible for three state programs: the Climate Catalyst Revolving Loan program run by the California Infrastructure and Economic Development Bank, as well as the CEC’s Long Duration Energy Storage and INDIGO programs. It received strong political support after federal incentives targeting carbon emissions were cut or repealed earlier this year.

 

In California, manufacturers recently lost more than $500 million in federal funding earmarked for decarbonization projects, said Teresa Cheng, California Director at Industrious Labs, a climate advocacy group.

 

“California really has an opportunity to invest in this sector,” Cheng said. “To not only cut industrial pollution [and] lower energy costs, but to make sure we keep manufacturing jobs here in the state.”

 

The bill also passed the Assembly floor 71-1. The one dissenting vote came from Republican Assembly member Carl DeMaio. Cheng and other supporters, including Amy’s Kitchen, the Natural Resources Defense Council and Sierra Nevada Brewing, said the projects will slash greenhouse gas emissions and improve air quality, while keeping electricity costs affordable for businesses and residents.

 

“It’s an example of how we can use climate policy to not only cut health harming pollution that’s resulting in expensive hospital bills and asthma attacks, early deaths, but also creating good jobs and helping to maintain and invest in our manufacturing base,” Cheng said.

 

California has one of the largest manufacturing economies, employing 1.3 million people, or about 7% of the state’s workforce in 2023, according to the Governor’s Office of Business and Economic Development. While it’s considered a climate bill, Cheng said it’s also an economic investment bill meant to offset project costs and help retain companies so they can do business in a “sustainable, efficient and non-polluting way.”

 

The Western Electrical Contractors Association opposed the bill, urging Garcia to remove the project labor Agreement provisions, arguing they are discriminatory and increase the cost of construction.

 

The state’s business and economic development agency reported one-time, stand-up costs ranging from approximately $1.5 million to $3 million associated with the bill, as well as ongoing costs ranging from $429,000 to $1.03 million.

 

A small but growing number of breweries are replacing or supplementing the use of gas boilers with heat pumps as one step toward their net-zero emissions goals.

Well-known breweries including Guinness and New Belgium Brewing are among those investing in these solutions. Cost, downtime and maintenance are common concerns for manufacturers seeking to replace equipment, but technology companies providing electrified heat and steam are building their businesses to address these pain points.

“Heat is three-quarters of industrial emissions,” said AtmosZero CEO Addison Stark. Half of that heat is delivered by steam, he added, and “there’s an outsize amount of steam used in food and beverage.” 

Stark started the company with the goal of building a cost-competitive and drop-in electrified replacement for conventional boilers. The solution allows manufacturing facilities to produce the steam needed for processes such as cleaning and sterilizing equipment and packaging, without the use of gas-powered boilers. 

Heat pumps work by moving heat from one place to another with high efficiency, which helps to compensate for the higher cost of electricity. AtmosZero’s Boiler 2.0 uses proprietary technology to extract heat from the air and convert it.

AtmosZero is focused on facilities that have steam loads of 1 to 5 megawatts of thermal capacity. Manufacturers that don’t want to tear out an entire boiler room can opt to just replace one boiler, or supplement their gas boilers. Stark said this ease of adoption is attractive to companies who are looking for simpler solutions.

“We are making steam electrification a product not a project,” he said. 

New Belgium Brewing, based in Fort Collins, Colorado, is among those utilizing AtmosZero’s equipment. The company installed an industrial electric boiler in May 2025 that can generate up to 1 ton of steam per hour.

“There are currently not a lot of market solutions for clean energy in this sector, and we’re excited to participate in the development and demonstration of this novel technology,” said a New Belgium spokesperson via email. If successful, AtmosZero's heat pump design will use significantly less electricity than conventional electric boilers and account for 30% to 40% of the brewery’s steam needs.

Steam used in brewing operations make up 25% of the brewery’s scope 1 and 2 emissions. If powered by a clean power source — which the City of Fort Collins Utilities has committed to provide by 2030 — AtmosZero’s Boiler 2.0 has the potential to significantly reduce the facility’s greenhouse gas emissions.

“The prototype will be measured for performance and reliability to determine if it can meet 100% of the Fort Collins brewery’s steam demand,” the spokesperson said. 

Breweries outside of the United States are also taking steps to decarbonize. Diageo is phasing out the use of fossil fuels at its St. James’s Gate Guinness facility in Dublin as part of a goal to reduce the site’s scope 1 and 2 emissions by more than 90%.

And in Manchester, U.K., Heineken is using a low-temperature hot water network driven by heat pumps to replace steam boilers as part of its own net-zero ambitions. The solution uses an “environmentally friendly” ammonia refrigerant with zero ozone depletion potential and zero global warming potential.

The relatively low to medium temperatures used by manufacturing facilities such as breweries and distilleries make them good candidates for heat pumps, according to sources. But a lack of understanding about what these solutions are and what they can do could prevent wider adoption. 

“There’s still a significant knowledge gap,” said Andrew Hoffmeister, a senior research analyst in the industrial program at the American Council for an Energy-Efficient Economy.

Hoffmeister said it will take a lot of changes by manufacturers to make electrification ubiquitous, with cost coming up as a common factor.

“Capital costs are definitely a barrier,” Hoffmeister said. “Operational costs can also be pretty significant, especially in places where electricity is expensive.”

Grant programs and subsidies could help to make investment in heat pumps more attractive for companies, but Stark said there’s a lack of stability for funding at the federal level. He said AtmosZero typically counsels customers to look at opportunities on the state and local level. 

Hoffmeister points to Pennsylvania’s Rise PA program as one such option. It’s a $396 million statewide industrial decarbonization grant program for industrial projects. Industrial facilities are the highest-emitting sector statewide and account for just over 30% of Pennsylvania’s total GHG emissions. Another example is California’s Indigo program, which provides incentives for industrial projects that will reduce emissions.

Such programs can help to offset initial investments, but they aren’t available everywhere.

Skyven aims to solve the upfront cost barrier to adoption with its industrial steam-generating heat pump. This technology can take heat from equipment such as a malt kiln and turn it into usable steam at up to 420 degrees Fahrenheit. The company has seen initial traction in the food and beverage industry, along with the ethanol industry, and pulp and paper plants.

Skyven shoulders the costs for the equipment and engineering, building an engineering and financial plan for the customer and then charging a recurring service fee. The company recoups initial costs by sharing the savings with the customer based on the amount of measured and verified energy saved onsite. By installing the technology alongside traditional boilers, the company can use arbitrage to respond to the supply and demand market. 

“Electric prices on the full scale electric market change every 5 or 15 minutes depending on the market,” Skyven CEO Arun Gupta said. “They can go sky high very quickly.” 

Gupta said Skyven’s heat pump is more cost effective 80% to 90% of the time. When electric prices soar, the system is designed to kick natural gas boilers back on with no downtime. However, he noted, downtime is a risk with all energy sources due to severe weather events and other factors.

“Putting our system in parallel with the existing boiler… reduces risk of the new technology adoption,” he said, noting the company also shares some financial risk with customers. “That motivates us to make sure that the heat pump operates in a way that actually saves customers money.”

Manufacturers are feeling the effects of more than $24 billion worth of renewable energy project cancellations in 2025.

Data compiled by E2 and the Clean Economy Tracker showed $1.6 billion worth of cancellations in September after $7 billion in June alone. This affects major manufacturers and technology suppliers for electric vehicles, solar, wind, battery, storage and related components. 

Among the most notable cancellations are major projects such as General Motors’ $4.3 billion plan to expand its electric pickup trucks facility in Michigan. The company recently reported a $1.6 billion impairment charge owing to the “termination of tax incentives for EV purchases,” referring to the $7,500 consumer credits which expired at the end of September. 

Another major player, Toyota, canceled a $1.4 billion electric SUV facility in Indiana. In addition, Kore Power canceled plans for its $1.2 billion battery cell plant in Arizona after not receiving funds from an $850 million conditional U.S. Department of Energy loan.

All these project closures combined have affected an estimated 21,000 jobs so far in 2025, with more than 5,000 cuts in June and 3,000 in September.

These are not just temporary construction jobs, but long-term manufacturing positions to be filled once the facility becomes operational, said Michael Timberlake, director of research and publications at E2 and author of the Clean Jobs America report. These are “conservative numbers,” he added, because they exclude construction labor and many canceled projects never shared investment figures or job estimates when they were initially announced. 

“The primary factor contributing to the billions of dollars in project cancellations this year is policy uncertainty caused by federal repeals,” said Robbie Orvis, senior director of modeling and analysis at Energy Innovation, a non-partisan energy and climate policy think tank. 

Policy shift

The One Big Beautiful Bill Act, passed in July, rescinded several tax credits and incentive programs for renewable energy initiatives.

The new policy made many energy projects ineligible for incentives earlier offered by the Biden administration under the Inflation Reduction Act. This led projects that were built on and heavily dependent on this funding to be paused, postponed, canceled or moved offshore. 

In September, Office of Management and Budget Director Russell Vought announced the cancellation of nearly $8 billion in grants for 223 projects across 16 states. The funding cuts include $1.2 billion for California’s hydrogen hub, which could have created 200,000 jobs. 

About $20 billion in renewable energy funding remained frozen as courts weighed whether the Trump administration can legally claw back funds already distributed through the Greenhouse Gas Reduction Fund and Solar for All programs, said Fox Swim, senior solar industry researcher at Aurora Solar. Beneficiaries of the incentive programs filed suits against the U.S. EPA for terminating the program and a federal appeals court recently ruled that the funds can be taken back. 

Elimination of EV tax credits, which made vehicles produced in the United States more affordable, could lead to a decline in sales and reduced investment in the sector, Timberlake said. Meanwhile, he said, “tax credits for batteries and geothermal will remain but are now riddled with complex new restrictions.” 

There are also new foreign entities of concern restrictions for the 45X manufacturing tax credit, which was originally designed to encourage the domestic manufacturing of renewable energy components, including solar panels, wind parts, battery components, inverters and critical minerals. The restrictions will limit the ability of foreign companies to claim the tax credits and work on U.S.-based projects.

“This will make it harder to build new giga-factories and compete globally in battery, solar and wind manufacturing,” Timberlake said. 

“In addition to these policy changes, the Trump administration’s imposing tariffs and barriers to clean energy deployment — for example, refusing to issue necessary permits — has complicated financing and building new projects, causing many projects to be canceled,” Orvis said.

Instead, the Trump administration is taking measures to promote the use of fossil fuels.

“The Trump administration has made no secret of its stance on renewable energy,” Swim said. “In its view, the U.S. power grid should rely primarily on coal, natural gas, hydroelectric and nuclear.”

To enable this, President Donald Trump signed two executive orders. The first, “Unleashing American Energy,” directs federal agencies to remove what it calls “unnecessary constraints” on domestic fossil fuel production and to review or rescind renewable energy incentives that “distort market competition.” The second, “Protecting American Energy from State Overreach,” aims to limit states’ authority to block or regulate fossil fuel infrastructure projects under environmental or climate-based criteria.

Experts say the new policies make it harder for renewable energy technology manufacturers to operate and expand. In many cases, manufacturers like GM and Toyota have shifted to fossil fuel-based projects in response to changes in government funding and incentives. 

What’s next for the energy sector?

The canceled projects aren’t just affecting the involved companies, but also disincentivizing the entire energy sector, experts said.

“The uncertainty created by recent regulatory changes and political opposition will make companies more hesitant to commit future investments in the U.S. clean energy market,” Timberlake said.

Orvis said this could lead companies to prioritize countries with more favorable and stable policies. 

Over the long term, Timberlake said this could result in “hundreds of billions of dollars in lost economic growth, with global competitors gaining ground as the U.S. steps back from a leadership role in clean energy.”

In the short term, companies might accelerate plans to take advantage of 45Y and 48E tax credits that will expire by the end of 2027. But the long-term outlook is gloomier, according to Orvis, as hundreds more grants get canceled.

“Continued hostility towards clean energy deployment and manufacturing will almost certainly lead to further project cancellations,” he said.

The ripple effects will be felt much beyond the manufacturing industry as cancellations at this scale could lead to large electricity price increases, Timberlake said, adding that “much of the damage is already done” and it may be too late to reverse course.

“With energy demand surging due to AI, data centers and EV charging infrastructure, scaling back clean energy development will constrain supply, strain the grid and drive up prices for households and businesses alike,” he added. “In 2024, renewables accounted for more than 92% of new power generation — slowing or reversing that trend will leave the country paying more for less energy.”

U.S. policy on electric vehicles and the critical minerals crucial to their production is rapidly changing. But lithium-ion battery recyclers remain hopeful that their businesses can help meet the Trump administration’s domestic manufacturing objectives.

President Donald Trump has moved to reverse many of former President Joe Biden’s signature clean energy incentives — including tax breaks for EVs and grants for certain battery recycling projects — sparking concerns about decreased demand for recycled lithium. Batteries are a major market for lithium, accounting for 87% of global lithium demand, according to the U.S. Geological Survey.

But the EV industry is maturing, and the impacts of the Trump administration’s policies remain to be seen, according to analysts. Despite a dip in U.S. EV sales during Q2, the category saw a 1.5% increase in the first half of 2025 compared with the same period in 2024.

The Trump administration has embraced boosting production of lithium and other critical minerals for other uses, such as weapons manufacturing. These developments give some in the battery recycling industry hope that the sector will weather the administration’s shift in energy policies, regardless of what happens with federal grants.

“There will definitely be continued growth,” says Ryan Melsert, CEO of the American Battery Technology Co. “I think the rate of change will be different. But remember that subsidies are always meant to be temporary.”

The administration’s tariff policy, which currently includes a 30% import rate on goods from China and 15% tariff on EU imports, adds another twist.

“Tariffs may increase short-term costs for domestic battery manufacturers, specifically those relying on imported components,” said Danielle Spalding, vice president of communications and public affairs for battery recycler Cirba Solutions, adding that they may also encourage more domestic sourcing. “By reducing reliance on foreign materials, these measures aim to strengthen long-term resilience and competitiveness in the U.S. battery sector.”

Shifting priorities

In January 2025, Trump signed an executive order that calls for making the U.S. “the leading producer and processor of non-fuel minerals,” including rare earth minerals. And in March, he invoked emergency powers to accelerate domestic production of critical minerals as part of a broader effort to dampen China’s dominance of the sector. That executive order directs agencies to “facilitate domestic mineral production to the maximum possible extent,” including by streamlining permitting and prioritizing funding for the production of critical minerals.

While the orders place a heavy emphasis on increasing domestic mining, battery recyclers see an opportunity to position their services as an attractive alternative or even complement. Extracting critical minerals such as lithium, cobalt, nickel and manganese from used EV batteries is faster and cheaper than mining and can accelerate the U.S.’s uncoupling from foreign supply chains, said Spalding.

“I think that battery recycling is a phenomenal tool to provide support for enhancing national security and the critical mineral supply, and it’s also a job creator,” Spalding said. “It is something that’s available today and it’s a growing sector that supports the administration’s goals as well as those of organizations that need to increase their access to raw materials.”

But some observers say the Trump administration’s scuttling of EV incentives and other renewable energy policies is likely to take a toll, and could hurt an emerging industry.

Jessica Dunn, a scientist who focuses on clean transportation at the Union of Concerned Scientists, said the rolled-back tax credits, grants and vehicle standards are “a huge blow to the U.S. becoming competitive in the emerging market.” The changes to the “new clean vehicle” tax credit, 30D, is particularly concerning, she said. That credit, which was partly tied to domestic production, boosted sales for EVs as well as batteries and EVs made in the U.S.

Dunn said lithium-ion battery recyclers may need to look to other sectors, such as defense, for their supply.

“It is a nascent industry that is relying on an influx of EV battery retirements after 2030,” she said. “To ensure that this U.S. industry continues to operate and a lower-impact mineral supply is created, it is essential that we enact requirements for producers to recycle these batteries and recover their minerals at the end of their life.”

Industry observers see a cautionary tale in the fate of Li-Cycle, a nine-year-old battery recycling company that filed for bankruptcy in May. The startup created a technology that allowed for the shredding of lithium-ion battery packs while immersed in liquid to reduce fire risk and increase efficiency.

It had built five facilities to pulverize vehicle battery packs into black mass and was beginning to build a refinery near Rochester, New York, that would extract materials from the powder to reuse. But construction stopped in 2023 after the company ran out of money to complete the building. DOE awarded the company a $475 million loan for the facility in November 2024, but by last spring Li-Cycle was warning of a lack of capital to be able to access the loan. It was recently sold to Glencore via a bankruptcy auction.

In another sign of industry uncertainty, Ascend Elements delayed construction of a recycling plant in Kentucky after a buyer of the recycled materials pulled out of the deal. Ascend also lost DOE funding, in its case a $164 million grant, due to “changing market conditions.” A separate $316 million DOE grant remains intact. 

Some companies, however, continue to expand. Redwood Materials, for example, is constructing a major facility near Reno, Nevada, close to a Tesla factory and launched an energy storage business earlier in 2025 that repurposes EV batteries. Redwood received DOE funding in 2023, but rejected the loan in 2024 after raising $2 billion in private financing and earning $200 million in revenue from recycled materials. 

Cirba is also moving ahead with expansion plans. The company’s $200 million DOE grant to build a lithium-ion battery recycling plant in Columbia, South Carolina, under 2021’s Infrastructure Investment and Jobs Act remains intact, Spalding said.

The South Carolina plant will be able to process 60,000 tons of used batteries from retired EVs, energy storage systems and other sources annually, producing enough battery-grade salts for about 500,000 EV batteries each year.

Cirba, which has a well-established black mass operation — which it says was the first to process the material at a commercial scale in the U.S., back in 2015 — is also expanding its facility in Lancaster, Ohio. That plant, funded by a pair of DOE grants totaling about $82 million, is on track to increase production 600% since 2022. Cirba’s recycling process involves disassembling battery packs, shredding the components, separating the material in a sink-float tank, then extracting the critical metals using a water-based process. 

A decade ago, “you’d have to pay to recycle lithium ion,” said Spalding, who also chairs the Recycled Material Association’s battery policy working group. “And now that we’re getting economies of scale, we’re seeing this ability to now hopefully refine it more.”

Looking ahead

Despite all of the change, Dunn from the Union of Concerned Scientists is cautiously optimistic about the industry’s future. According to a 2023 McKinsey & Company report, demand for lithium-ion batteries was poised to increase 27% a year between 2022 and 2030.

And even though other battery technologies continue to evolve, lithium-ion batteries are likely to remain dominant for the foreseeable future, Spalding said. And recyclers are well-positioned to help meet that demand, Melsert added.

“The elements within batteries can be used indefinitely,” he said, because they don’t degrade during the recycling process. ABTC’s technology involves breaking down the batteries into progressively smaller parts and then separating out the metals in water.

Melsert added that his company’s strategy of locating battery recycling facilities near EV plants helps reduce costs and logistical challenges for both parties.

“It makes sense that, at the end of the life of the batteries, you recover the elements and circulate them back locally. When you do, you have much shorter transportation distances, you have lower costs, and lower emissions,” he said, adding that the steady supply of battery materials can also help manufacturers boost production. “They have a lot of certainty about where their next feedstock is going to come from.”

Melsert said a $144 million DOE grant awarded in December to support construction of a second lithium-ion battery recycling plant remains active. ABTC’s strategy also includes lithium mines, which Melsert said positions the company well to weather policy changes. 

“We do need recycling and we do need new minerals introduced into that loop,” he said. “That's why we chose to have both of the businesses – because the industry really needs both.”

In June, ABTC’s Tonopah Flats Lithium Project, a surface lithium mine to be built in Nevada, was fast-tracked under Trump’s executive order to increase domestic mineral production. The site is currently scheduled to begin pilot operations by 2027 and commercial production in 2028.

As the post-Biden business and regulatory landscape takes shape, experts see a mixed but promising future for the sector.

“I believe the U.S. still has the potential to be a top lithium producer given the ongoing growth in global demand,” said Dunn. “However, without these policies, we will see less lithium eventually ending up in the batteries of U.S. vehicles, solely because of a slower transition to electric vehicles, therefore impacting the lithium-ion battery recycling facilities and the supply of recovered minerals in the U.S.”