Epsilon receives $115 million in tax credits as US seeks anode material security

Epsilon has received $115 million in tax credits as the company looks to develop midstream capacity in the US.

The support will go towards establishing the Indian-owned anode and cathode player’s planned $650 million synthetic graphite manufacturing facility in North Carolina.

Escalating geopolitical tensions between the US and China could threaten the ability for US cell makers to access anode feedstock, with China’s heightened export restrictions for graphite material highlighting this risk.

Why is Epsilon building a project in the US?

“The US has emerged as a destination for plants supporting energy transition primarily due to Inflation Reduction Act tax credits. Production tax credits have bolstered the competitiveness of the US compared to the rest of the world leading to project announcements especially in the energy transition areas,” said Shruti Kashyap, Product Director at Benchmark.

Kashyap also noted the synthetic graphite anode supply chain benefits from typically taking less time to come online compared to natural graphite anode counterparts, where mines require social license to operate and are subject to a long permitting process.

Epsilon is positioning itself as a source of ex-China synthetic graphite as demand for the material rises.

What has the Biden administration done to support the battery supply chain?

There has been a flurry of loans and tax credits issued by the US government during the final months of the Biden administration.

“Biden’s government likely prioritised closing as many successful grants as possible before the transition to a Trump administration, given the uncertainty around how these programs might be impacted under his leadership,” said Tony Alderson, Senior Analyst at Benchmark.

Chinese companies hold large market shares across the lithium ion battery supply chain and this is acutely prominent in the anode market.

The US wants to ensure the security of battery material supply so domestic producers can meet demand.

Other US-based anode material projects have also received tax credit support. On 14 January 2025, Syrah Resources was awarded a $165 million tax credit to support the potential expansion of its natural graphite anode active material facility in Vidalia, Louisiana.

Similarly, in April 2024, Novonix was selected to receive $103 million in tax credits to support development of its synthetic graphite facility in Chattanooga, Tennessee.

Whilst demand for synthetic graphite is growing in North America, the notable weight on synthetic graphite currently seen amongst Chinese domestic anode producers has not yet been mirrored in the North American market.

“This could align with regional priorities, where the North American market is more focused on great energy capacity,” said Alderson.