Battery plant backed by $100 million federal grant no longer planned for Lynchburg

A California-based manufacturer has canceled its plans to build a lithium-ion battery components plant in Lynchburg that would have been supported by a $100 million federal grant.

“The strategy for Applied Materials’ battery technology business has evolved, and we no longer intend to construct a new manufacturing facility,” company spokesperson Ricky Gradwohl said Friday.

Applied Materials employs 34,000 people in 24 countries providing engineering and equipment for semiconductors and flat-panel displays. It has a Virginia office in Manassas. The company earns more than $26 billion in annual revenue.

Nearly two years ago, the U.S. Department of Energy awarded Applied Materials a $100 million grant to build a manufacturing plant to support battery makers and automobile manufacturers. The grant was to be complemented by a $109 million “recipient share.”

Applied Materials planned to build an “advanced prelithiation and lithium anode manufacturing facility” to support “industrial-scale production of advanced lithiated anodes for multiple battery cell makers and automobile manufacturers,” according to a Department of Energy fact sheet published at the time.

The Department of Energy confirmed in a brief statement on Friday that it and the company had mutually agreed to terminate the grant.

It’s unclear when that happened. As of April, the project was listed as an active investment on the portfolio website of the Department of Energy’s Office of Manufacturing and Energy Supply Chains. On Friday, it was no longer listed.

Megan Lucas, CEO and chief economic development officer of the Lynchburg Regional Business Alliance, confirmed Friday that the Lynchburg region has “no active projects in the EV [electric vehicle] component sector” and said that had become true “within the past 45 to 60 days.”

“We have projects that are going full speed ahead, and then they close for a variety of reasons,” she said.

After the Department of Energy announced the grant award in October 2022, the DOE and related news reports indicated that the plant was headed to North Carolina.

But in December 2023, the DOE’s National Environmental Policy Act compliance office published a review document that listed the location as Lynchburg.

By April, the DOE’s portfolio website named Lynchburg as the plant’s future home.

That month, Virginia’s Major Employment Investment Project Review Commission approved an economic incentive package to bring the plant to the commonwealth.

At that time, U.S. Sen. Mark Warner, D-Va., confirmed to the Richmond Times-Dispatch that state incentives had been approved for the Applied Materials project in Lynchburg and a separate project in Manassas involving the semiconductor manufacturer Micron.

In a joint statement Friday, spokespeople for Warner and U.S. Sen. Tim Kaine, D-Va., said that “contract termination decisions do not involve federal lawmakers” and noted that the decision to cancel the federal grant was a mutual one between the Department of Energy and the company.

“The senators remain laser focused on continuing to help Virginia harness the benefits of legislation they’ve helped pass, including the Inflation Reduction Act, which helped attract hundreds of millions of dollars in corporate investment across the Commonwealth last month alone,” the statement said.

Representatives for the Lynchburg city government and Gov. Glenn Youngkin did not respond to requests for comment.

Virginia Sen. Mark Peake, R-Lynchburg, who is not a member of the state incentives commission, said in April that the company was expected to bring about 100 jobs to the Hill City.

Peake said Friday that had not had conversations with anyone at Applied Materials but that he had recently heard that a large economic development project slated for Lynchburg was not moving forward after all.

“I suspect that maybe a consideration for anybody in the electric vehicle battery manufacturing process is whether or not the sales are going to support expanded growth at this time,” Peake said.

On Wednesday, Bloomberg reported that Applied Materials was denied a $4 billion U.S. CHIPS and Science Act grant to build a research and development center in Sunnyvale, California.

Citing “people familiar with the matter,” Bloomberg reported that the project didn’t qualify for funding through the act, which was passed in 2022 and includes about $280 billion to support domestic research and manufacturing of semiconductors.

In November, Reuters reported that Applied Materials is under criminal investigation for potentially evading restrictions on exporting products to China.

As of February, the investigation had broadened to include U.S. agencies including the U.S. Securities and Exchange Commission, Reuters reported .

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