Amprius Technologies will convert an American electric vehicle battery line into a drone cell factory with a Department of War grant of up to $75 million, the Fremont, California company announced on Monday, September 28. The line is run by an unnamed South Korean battery maker and is supposed to turn out 12 million silicon-anode cells a year for Group 1 through 3 drones starting in early 2028. The conversion costs about $100 million, with Amprius and its partner covering the rest in kind.

CEO Tom Stepien went on CNBC the same morning and called it a $75 million grant. The company’s own announcement says a majority of that award is unfunded.

Most Of The $75 Million Still Needs Congress To Appropriate It

Amprius’s announcement says a majority of the award remains unfunded and subject to future appropriations. Payments also depend on the government accepting specified milestones, which the company says it may not hit on time or at all. The money comes through the Industrial Base Analysis and Sustainment program.

Amprius signed the deal, a fixed-price Other Transaction Agreement called Project acCELLerate, on September 23, its 8-K filing shows. The government has obligated about $22 million so far, from fiscal 2025 research and development funds, for a base period that runs to September 22, 2028. That is less than a third of the headline number.

The size of the bet is in Stepien’s own numbers. He told CNBC that the 12 million cells represent about $150 million in incremental annual revenue. In August, Amprius raised its full 2026 revenue guidance to at least $140 million. One converted line, fully funded and fully sold, would more than double the company.

Amprius Walked Away From Its Own Colorado Factory Before Choosing A Retrofit

Amprius announced in March 2023 that it would spend $190 million turning a 774,155-square-foot building in Brighton, Colorado, into a battery factory, and the Department of Energy later selected it for a $50 million grant toward the project. Amprius cancelled the plant in June 2025.

Earlier this year the company paid $20 million to end its Brighton lease, Manufacturing Dive reported from a securities filing. On CNBC, Stepien sold the new plan as the opposite of Brighton: “We’re not pouring concrete, we’re not putting steel up.” After Brighton, it reads as a lesson learned.

Amprius now builds through partners. One of its South Korean contract manufacturers has delivered cells since September 2025, and Nanotech Energy in Northern California is its U.S. partner for cylindrical cells. The new line adds pouch cells. A separate Defense Innovation Unit contract for NDAA-compliant drone batteries now totals $18.1 million. Stepien told CNBC that the anode, cathode, separator and electrolyte all have to come from outside a foreign entity of concern in about 15 months.

Stepien Says China Still Makes Cheaper Cells That Customers Want

Stepien told CNBC that Amprius still has cells made in China. He said the company is happy with their cost and production, and so are many customers. He expects a balance, with buyers chasing the best technology often buying Chinese and contract-bound buyers needing cells made elsewhere.

That second group is growing because the Pentagon wrote it into the rules. Prepared Senate testimony from the Drone Dominance Program in March said Phase II would ban systems using batteries or motors from covered countries. On the August earnings call, Stepien said about half of the 19 drone makers invited to the Fort Carson demonstration use Amprius cells. The program opened its $450 million Phase 3 this week.

The dependency is older than the program. A former senior defense official named batteries among the top three Chinese parts in Blue UAS aircraft, as DroneXL laid out in its NDAA-compliant drones guide. In October 2024, Beijing ordered Dongguan Poweramp, Skydio’s sole battery supplier, to cut the company off, and Skydio rationed batteries shipped with its drones.

On air, Stepien called the cells twice as energy dense as anything else out there. The announcement is narrower: up to twice the energy density of conventional graphite-anode cells.

DroneXL’s Take

Batteries are the right place for this money. When Beijing cut off Skydio’s battery supplier in 2024, America’s largest drone maker had to ration packs, and no American-made airframe fixed that. A domestic cell line closes that gap. It won’t close the price gap, and Stepien said as much on national TV when he praised his Chinese cells’ cost. My read is that the Korean-run American line sells first to buyers whose contracts leave no choice, while the police departments and delivery operators Stepien pitched on CNBC keep buying on price. That is how fair competition should work. I’d rather see the Pentagon pay for a factory than ban a supplier. The weak point is the money. A mostly unfunded grant is a promise that depends on Congress, and the early-2028 date only holds if those appropriations arrive.

Sources: Amprius Technologies, CNBC, Manufacturing Dive, Amprius 8-K, Amprius Q1 2026 results (SEC), Nasdaq.

DroneXL uses automated tools to support research and source retrieval. All reporting and editorial perspectives are by Haye Kesteloo. Read our editorial standards.