WASHINGTON, DISTRICT OF COLUMBIA / RankWire.AI / – The United States continues to expand its battery manufacturing capabilities while attempting to reduce reliance on China. Although domestic production of battery cells has increased, significant supply shortages persist at earlier stages of the supply chain. Chinese firms maintain a dominant position in the global market for several key materials essential for lithium-ion batteries, including graphite anodes, cathode materials, and lithium iron phosphate technology. The current challenge extends beyond assembling batteries to securing the necessary minerals, components, and processing capacity for manufacturing.
According to the International Energy Agency, China accounted for over 80% of worldwide battery cell production in 2025. It also supplied roughly 85% of cathode active materials and more than 90% of anode active materials. These components are fundamental to battery manufacturing for electric vehicles and energy storage solutions. The agency further identified China as the primary hub for producing lithium iron phosphate batteries, commonly referred to as LFP batteries.
Throughout 2025, U.S. battery manufacturing capacity saw significant growth as companies launched or expanded new facilities. Nevertheless, much of the raw materials used domestically still originate from or are processed abroad. Natural graphite exemplifies this dependence; the United States reported complete net import reliance for natural graphite in 2025. China remained a key supplier, with Chinese processors continuing to dominate the production of battery-grade graphite used in traditional lithium-ion anodes.
Deeper supply chain issues persist with critical materials
The U.S. Department of Energy has allocated new funding to address the weakest points in the domestic supply chain. In August 2026, the department announced a $500 million investment across seven projects focusing on critical minerals, battery development, and recycling efforts. These initiatives include domestic processing, recovering materials from used batteries, and researching alternative anode materials. The DOE emphasized that this funding aims to build U.S. capacity across various stages of battery production.
Additionally, Washington has increased tariffs on Chinese-made battery components and materials. The tariff on lithium-ion batteries for electric vehicles rose to 25% in 2024, and in 2026, the rate for non-electric vehicle lithium-ion batteries was also elevated to 25%. Natural graphite imported from China faces a 25% tariff in 2026. These measures impact products used in electric vehicles, consumer batteries, and grid storage, where the demand for lithium-ion technology remains high.
Supply chain ties reveal ongoing global interconnections
An illustrative example of the persistent link between U.S. manufacturing and Chinese battery expertise is the development of an LFP battery plant by Ford Motor Co. in Michigan, which utilizes licensed technology from CATL. While Ford owns and operates the facility, CATL supplies the licensed battery technology. Federal authorities renewed scrutiny of this arrangement in September 2026. The project underscores the continued influence of Chinese firms in the knowledge and technology behind LFP batteries, even when production occurs within the United States.
The demand for batteries extends far beyond passenger vehicles. In 2025, more than 90% of global stationary energy storage deployments relied on LFP chemistry. The U.S. grid storage capacity has kept rising as utilities add storage solutions to their power systems. This growth underscores the critical importance of securing reliable supplies of cells, graphite, cathodes, and other battery materials. Although new U.S. factories have increased final manufacturing, processing and component production remain central to the country’s continued reliance on Chinese materials and expertise.
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