American Battery Technology Company (NASDAQ: ABAT) saw its stock plunge more than 24% in premarket trading Thursday after the U.S. Department of Energy (DOE) terminated a critical $57.7 million grant for the company’s lithium hydroxide manufacturing facility.
Grant Termination Details
The DOE officially cancelled the assistance agreement for a $115.5 million lithium hydroxide project, effective August 31, 2025. Under the original agreement, the DOE’s Manufacturing Energy Supply Chain (MESC) office was to contribute $57.7 million in federal funding, with American Battery matching that amount for a total project cost of approximately $115 million.
The company disclosed in an SEC 8-K filing on October 15 that the DOE had notified it of the termination on October 9, 2025. At the time of termination, approximately $52 million in reimbursable DOE funds remained unused under the agreement.
Audit Process Behind Decision
The termination followed a May 2025 memorandum issued by the DOE ordering comprehensive audits of all grants awarded through the Manufacturing Energy Supply Chain office. The review focused on federal stewardship and substantial involvement terms of all such grants.
The DOE’s internal memo introduced new procedural reviews and audit criteria for all MESC-related funding awards, triggering compliance reviews of several projects, including American Battery’s Tonopah facility, which ultimately led to the grant termination.
Company Response and Appeal
American Battery Technology submitted a formal appeal of the termination on October 10, 2025, and stated it intends to pursue all available dispute resolution remedies in connection with the grant cancellation.
Despite the setback, the company emphasized it intends to proceed with the project “without impact to timeline or scope,” noting alternative funding sources are available.
Financial Position and Alternative Funding
The company highlighted that it has already raised over $52 million from public markets year-to-date in 2025, providing alternative funding to continue the project development. Additionally, American Battery received a Letter of Interest from the U.S. Export-Import Bank for up to $900 million in financing support for both its Tonopah Flats lithium resource and the associated refining infrastructure.
Project Status and Strategic Importance
American Battery’s Tonopah Lithium Flats Project, which was designated as a Transparency Priority Project by the National Energy Dominance Council in June 2025, maintains its status as a Priority Project despite the grant termination. This designation recognizes the project’s importance in advancing domestic lithium production and supporting U.S. energy independence.
Market Impact
Analysts noted that the market’s reaction was not solely about the $57 million in lost funding—it was about signaling. In a sector heavily reliant on government incentives, the DOE’s move raised fears about a broader pullback or increased risk of future reversals, creating an air of unpredictability for investors evaluating grant-backed projects across the lithium, battery materials, and cleantech verticals.
The termination represents a significant development in the battery materials sector, particularly for companies dependent on federal grants for project development and de-risking. As American Battery Technology pursues its appeal, the outcome could have broader implications for other DOE-funded projects in the critical minerals and clean energy space.
