August 24th, 2026 | 08:00 CEST
Potential Winners of the USD 1.4 billion Pentagon Deal: Rheinmetall, HPQ Silicon and BYD
The Pentagon's USD 1.4 billion allocation to the US startup Sila Nanotechnologies for the development of silicon batteries is not a financial deal, but rather the starting signal for a new era in defense. The US military is aware that drones will dominate the battlefields of the future. Their performance is largely determined by the energy density of the battery cells. Silicon anodes promise advantages in terms of range and payload. The US and Europe have also recognized that they must reduce their dependence on Asian manufacturers for domestic supply chains. So today, we take a closer look at Rheinmetall's efforts, HPQ Silicon's latest innovations and BYD's battery activities.
time to read: 4 minutes
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Author:
Armin Schulz
ISIN:
RHEINMETALL AG | DE0007030009 , BYD CO. LTD H YC 1 | CNE100000296 , HPQ SILICON INC | CA40444L1031 | TSXV: HPQ , OTCQB: HPQFF
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Author
Armin Schulz
Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.
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Rheinmetall: System Integration and Networking
Rheinmetall has been undergoing a transformation for several months. The Düsseldorf-based group no longer sees itself as a traditional manufacturer of ammunition and vehicles but aims to cover all areas of defense. A particular focus is on networked, unmanned mission platforms. The order backlog of over EUR 80 billion shows that demand for modern defense solutions remains high, and a growing portion of this demand is attributable to drones and autonomous systems. News from the past two months clearly underscores this.
In the field of loitering munitions, commonly known as kamikaze drones, Rheinmetall has developed the FV-014 system. This modular swarm launcher can be mounted on a truck to engage targets at distances of up to 100 km. At the same time, the group is pushing ahead with the integration of Boeing's MQ-28 Ghost Bat for manned-unmanned teams. Software and mission integration is to take place in Germany, using domestic sensors and weapons. Rheinmetall is also relying on partnerships for autonomous ground vehicles. The acquisition of the Croatian company DOK-ING and the new center of excellence for land autonomy in the United Kingdom are creating capacity for heavy, AI-controlled platforms.
Air defense against drones remains another pillar of the business. With Skynex and the integration of passive radar technology into the Skymaster command and control system, the Group is improving its ability to defend against such swarms. The development of a high-energy laser for the navy also demonstrates how Rheinmetall is responding to new threat scenarios. The strategic partnership with Lockheed Martin for ATACMS co-production in Germany expands the portfolio to include precision-guided weapons. For investors betting on European defense technology, with a focus on autonomy and connectivity, Rheinmetall remains the top choice.
HPQ Silicon: Two Core Pillars with Hydrogen as a Bonus
The Canadian technology company HPQ Silicon has built a diversified business model around advanced materials. Most recently, the main focus has been on its silicon-anode battery technology and fumed silica, produced from quartz. Both are geared toward the commercialization of high-performance materials in profitable niche markets. HPQ is supported by two strong partners: Novacium for its battery technologies and PyroGenesis for its fumed-silica process. In addition, the company is working on hydrogen production from aluminum waste. Here, the partner is also Novacium, which has developed the HyDRAS process to convert aluminum slag and red mud into green hydrogen.
By far the most advanced area is the battery business. HPQ is not only a strategic partner but also a shareholder in the French company Novacium, which develops silicon-based anode materials. Significant progress has been made in recent weeks. On August 6, the ENDURA+ Gen4 21700 cells received UN 38.3 transport certification, enabling international shipping for customer qualification programs. This was followed on August 19 by the first commercial order for GEN3 battery packs from LN Innov for FPV drones used by a French army regiment. This represents an important commercial validation in the defense sector.
The second pillar, the production of fumed silica from quartz using a plasma process, is technologically promising and has reached the pilot phase. The pilot plant is operational, and discussions are currently underway to move toward commercialization. On August 20, Novacium presented research findings at COM 2026 in Calgary on the HyDRAS™ process, which converts aluminum waste into hydrogen. The hydrogen yield was more than doubled under test conditions. As an investor, HPQ Silicon has three promising projects in the pipeline. The battery business is already generating initial revenue, while fumed silica and hydrogen are promising options for the future.
BYD: Technology Leadership Amid Weaker Margins
Delivery figures for July 2026 paint the usual picture. With 419,211 vehicles sold, BYD posted a year-over-year increase of around 22% and its third consecutive monthly gain. The main driver was once again the overseas business, which set a new record at 179,841 units and grew by 124%. The problem remains the shrinking domestic sales, which fell by 9% to 239,370 units. As a result, the share of exports in total sales has risen to just under 44%, compared to 23% for the full year of 2025. International expansion is increasingly becoming a pillar of growth, supported by upcoming local manufacturing in Brazil and Hungary.
The second generation of the Blade Battery, unveiled in March, marks a significant advancement in cell technology. The combination of an LMFP cathode and a silicon-carbon composite anode raises the energy density to 190 to 210 Wh/kg. This is a significant leap forward over its predecessor, which only reached 140 to 150 Wh/kg. The fast-charging capability of up to 6C enables charging times of about 9 minutes for 10 to 97%. As a result, the flagship Han L model, or "Great Han," achieves a CLTC range of 1,008 km. This allowed the group to demonstrate the mass-market readiness of silicon anodes.
In July, BYD Energy Storage secured a major contract from Masdar for the "Round-the-Clock" project in Abu Dhabi. An 11.275 GWh Haohan storage system with a capacity of 1,644 MW is to be built there. With the 2,710 Ah Blade cell, the system delivers up to 10 MWh of capacity in 20-foot containers. At the same time, BYD is advancing the development of solid-state batteries. Six new patents filed in August 2026 address dual-electrolyte cathodes and interface stability. The company aims to begin pilot production in 2027. The group wants to maintain its technological leadership, which comes at a high cost, but is simultaneously under pressure from the Chinese price war and significantly weaker operating performance.
The Pentagon's USD 1.4 billion deal with Sila Nanotechnologies clearly shows that the battery market is poised for significant growth, driven in part by defense technology. Rheinmetall is positioning itself as an indispensable systems integrator for connected, autonomous platforms and is benefiting from its massive order backlog. HPQ Silicon, together with its partner Novacium, is already delivering its first commercial battery packs to French military customers and has thus received crucial validation. BYD dominates mass production of silicon anodes in the consumer market but must contend with declining domestic margins and high investments in solid-state batteries.
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