WASHINGTON, DISTRICT OF COLUMBIA / RankWire.AI / – The United States is expanding its local battery manufacturing capabilities as part of an effort to lessen reliance on China. The more profound challenge lies further along the supply chain, where China continues to hold sway over battery materials, processing, and vital manufacturing technologies used globally. U.S. factories have increased their capacity; however, many still depend on imported components and refined minerals. This gap places particular focus on materials such as graphite, cathodes, anodes, and lithium iron phosphate, which are central to Washington’s battery development strategy.
In 2025, China was responsible for over 80% of the world’s battery cell production. It also supplied around 85% of cathode active material and more than 90% of anode active material. The International Energy Agency highlighted these figures in its 2026 global electric vehicle outlook. Chinese manufacturers also provided nearly three-quarters of global electric vehicle battery deployment in 2025. This industrial dominance spans from mineral refinement to finished battery cells and manufacturing equipment.
Compared to China, the United States has experienced faster growth in battery manufacturing capacity in percentage terms. During 2025, U.S. lithium-ion nameplate capacity increased by approximately 50%. Nonetheless, the country remains highly dependent on imported materials, recording 100% net import reliance for natural graphite in 2025. For several years prior, China ranked among the leading graphite suppliers, and Chinese processors continue to hold a dominant position in producing battery-grade graphite.
Chinese dominance extends to the most challenging segments of the battery supply chain
Federal funding initiatives are now aimed at these upstream vulnerabilities, as well as battery assembly. On Aug. 20, the U.S. Department of Energy announced $500 million for seven projects. These initiatives focus on critical mineral processing, battery manufacturing, and recycling within the United States. One of the projects involves refining materials recovered from used lithium-ion batteries and manufacturing scrap. Other projects prioritize domestic processing and alternative battery materials to bolster U.S. supply resilience.
Tariffs are also part of the strategy to shift sourcing away from China. In 2024, tariffs on Chinese electric vehicle lithium-ion batteries increased to 25%. By 2026, tariffs on non-electric vehicle lithium-ion batteries rose to 25%, and natural graphite from China faced a similar 25% tariff rate. These measures target products crucial to electric vehicle and energy-storage supply chains, aiming to reduce Chinese dominance in these critical areas.
Battery technology collaborations face increased scrutiny
Partnerships in technology have added complexity to the U.S. battery industry debate. Ford Motor Co. is constructing a lithium iron phosphate battery plant in Michigan that uses licensed technology from CATL. While Ford owns and operates the factory, the Chinese battery company supplies the licensed technology. U.S. officials renewed their focus on this partnership in September 2026. Lithium iron phosphate batteries remain among the most China-dependent technologies because Chinese firms dominate both their manufacturing and key material supply chains.
The supply chain challenge extends beyond electric vehicles. In 2025, lithium iron phosphate batteries represented over 90% of global stationary battery storage installations. U.S. grid battery capacity continues to grow alongside domestic manufacturing investments. However, most components are still imported, with China providing a significant share of those materials. Building cell factories addresses only part of the dependence; processing, component production, graphite supply, and technical manufacturing expertise continue to be vital elements of the U.S. battery supply chain.