Unusual Machines has finished buying Upgrade Energy, a drone battery maker based in Torrance, California. The deal is worth up to $52 million. The Information reported the inside story as an exclusive, and company filings fill in the terms. The deal was announced on May 11 and closed in mid-October. It gives Unusual Machines, a maker of drone parts that meet U.S. defense sourcing rules, control over one of the hardest parts of the drone supply chain to bring home: the battery.
🔋 The Short Version
- Buyer: Unusual Machines, a public company that makes motors, flight controllers and video systems for drones
- Target: DroneNX LLC, which does business as Upgrade Energy and makes batteries and power systems for drones
- Price: About $26 million upfront (roughly 1.8 million shares plus $1 million in cash) and up to $26 million more in earn-outs
- Earn-out condition: Tied to Upgrade Energy hitting revenue targets. One filing summary describes a $10 million annual revenue goal over two years
- Footprint: An 18,500-square-foot plant in Torrance with about 30 employees, plus a new battery pack line in Orlando, Florida
🛩️ Why This Deal Matters
The biggest takeaway is strategy. With batteries in the lineup, Unusual Machines can now sell most of a drone’s powertrain (motors, controllers, power and video) from U.S. factories. It’s going after a market where buyers want one American supplier instead of a patchwork of vendors.
That matters because of the NDAA, the annual U.S. defense law that sets the military’s budget and rules. Recent versions restrict Chinese drones and parts in government and defense purchases. For years, DJI and other Chinese suppliers have dominated the commercial drone market, mostly on price. Batteries were one of the toughest gaps to fill, since most of the world’s lithium cell production and battery know-how sits in China.
If you want to sell drones to the Pentagon, police departments or critical infrastructure operators, where your parts come from is now a requirement. It’s no longer a nice-to-have.
🤖 The AI Angle
This may look like a hardware story, but it’s tied to the push toward autonomous systems. Military and commercial drones are running more AI on board: computer vision, autonomous navigation and target recognition. All of that uses power. Better batteries mean longer flights, heavier compute payloads and more capable autonomy.
The lesson for people building AI for drones and robots is simple. Your models are only as useful as the platform carrying them. Whoever controls the energy layer has a lot of say over what edge AI can actually do in the field.
📊 Reading the Deal Structure
The structure is worth a look. Only half the headline price is guaranteed, and most of it is paid in stock. The rest depends on revenue growth. That’s a cautious way to do it:
- Unusual Machines saves cash while it scales up production
- Upgrade Energy’s sellers only get the full value if demand shows up
- Shareholders take on less risk if defense orders arrive slowly
The Orlando expansion shows the company expects that demand. It reportedly leased about 14,000 square feet there in June for the battery business, before the deal had even closed.
🔭 What to Watch Next
- Production ramp: Can Torrance and Orlando make enough packs to meet defense-level demand?
- Cell sourcing: Assembling packs in the U.S. is one thing. Getting the cells inside them from outside China is harder
- Contract wins: The earn-out targets will show whether the bet is working
- More deals: Expect other U.S. drone parts makers to buy suppliers as the race to build a domestic supply chain speeds up
This deal is one more sign that drone and autonomous-system supply chains are being rebuilt around national security, and batteries are a big part of that. You can find more details in the original reporting from The Information.