WASHINGTON, DISTRICT OF COLUMBIA / RankWire.AI / – The United States is ramping up local battery manufacturing initiatives in an effort to lessen reliance on China. However, the more significant hurdle lies deeper within the supply chain. China continues to lead in the extraction and processing of critical battery materials, as well as in essential manufacturing technologies used across the globe. While U.S. factories have expanded their capacity, many still depend on imported components and refined minerals. This gap has placed particular focus on graphite, cathodes, anodes, and lithium iron phosphate materials as central elements of Washington’s battery strategy.
In 2025, China produced over 80% of the world’s battery cells and supplied approximately 85% of cathode active material along with more than 90% of anode active material. The International Energy Agency documented these market shares in its 2026 global electric vehicle outlook. Chinese manufacturers also contributed nearly 75% of global electric vehicle battery deployment that year. This industrial dominance spans from raw mineral processing to the production of finished cells and manufacturing equipment for batteries.
Meanwhile, the United States has outpaced China in percentage growth of battery manufacturing capacity. During 2025, U.S. lithium-ion nameplate capacity increased by roughly 50%. Despite this rapid growth, the nation remains highly vulnerable to imported materials, with 100% net import reliance for natural graphite recorded in 2025. Over the past four years, China has been among its top graphite suppliers, and Chinese processors control a significant share of the battery-grade graphite market.
China maintains control over the most critical segments of the battery supply chain
To address upstream vulnerabilities and bolster domestic battery production, federal funding initiatives now focus on these critical areas. The U.S. Department of Energy announced on Aug. 20 the allocation of $500 million across seven projects. These initiatives aim to enhance processing of critical minerals, develop battery manufacturing capacity, and establish recycling facilities within the United States. One project involves refining materials recovered from used lithium-ion batteries and manufacturing scraps. Other projects are geared toward domestic processing and the development of alternative battery materials to increase U.S. supply security.
Tariffs are also a key component of the strategy to shift sourcing away from China. In 2024, tariffs on Chinese electric vehicle lithium-ion batteries were increased to 25%. By 2026, tariffs on non-electric vehicle lithium-ion batteries will also reach 25%. Additionally, natural graphite imported from China faces a 25% tariff rate in 2026. These measures target products that are crucial to electric vehicle and energy storage supply chains.
Focus on battery technology collaborations persists
Partnerships in technology have become an additional factor in the U.S. battery industry debate. Ford Motor Co. is constructing a lithium iron phosphate battery plant in Michigan, utilizing technology licensed from CATL. Ford owns and manages the factory, while the Chinese battery firm supplies the licensed technology. U.S. authorities revisited concerns regarding this relationship in September 2026. Lithium iron phosphate batteries are among the most China-dependent technologies, as Chinese companies dominate both their manufacturing and the supply of key materials involved.
The supply chain challenges extend beyond electric vehicles. In 2025, lithium iron phosphate batteries accounted for over 90% of global stationary battery storage installations. Domestic manufacturing efforts have contributed to continuous growth in U.S. grid battery capacity. Nevertheless, most components are still imported, with China representing a major supplier. Addressing dependence only through cell factory construction overlooks critical areas like material processing, component manufacturing, graphite supply, and technical expertise—these remain vital to strengthening the U.S. battery supply chain.