Lion Energy takes equity stake in American Battery Factory aimed at securing domestic battery supply

Utah-based Lion Energy has taken an equity position in a “strategic partnership” with American Battery Factory (ABF), aiming to secure a domestic supply of lithium iron phosphate (LFP) cells it first signed on for back in 2022.

The new partnership via an equity stake centers on ABF’s planned gigafactory in Tucson, Arizona. Lion has “over 4.5 GWh” in initial offtake agreements from ABF, from ABF’s initial planned roughly 5.5 GWh, covering the first five years of production.

While Lion Energy describes the move as a partnership, the financial terms remain undisclosed. Neither party has provided specifics on the size of the equity stake or the valuation, leaving it unclear how much leverage or risk Lion actually holds over ABF’s future production.

The deal is skewed by corporate shifts, with NASDAQ-listed Aqua Metals currently in the process of acquiring Lion Energy.

A primary driver for the tie-up and for the increase in US-based battery manufacturing and deals is the tightening of Foreign Entity of Concern (FEOC) and Domestic Content requirements under the Inflation Reduction Act. Lion Energy plans to bring new US assembly lines online this June, but “Assembled in USA” is increasingly questioned as being eligible for high-tier tax credits.

From ABF’s Tucson facility, Lion Energy intends to use the domestically manufactured prismatic LFP units. ABF’s ability to scale quickly to meet Lion’s planned June production ramp remains a key question. ABF previously announced it had partnered with China’s KAN Battery to pilot production of LFP cells.