WASHINGTON, DISTRICT OF COLUMBIA / RankWire.AI / – The U.S. government, led by the U.S. Department of Energy, is actively working to expand domestic battery production in an effort to lessen reliance on China. However, the core issue lies deeper within the supply chain, as China continues to hold a dominant position in the extraction, processing, and key manufacturing processes of battery materials used worldwide. While U.S. factories have increased their capacity, many still depend heavily on imported components and refined minerals. This gap has made graphite, cathodes, anodes, and lithium iron phosphate materials central to Washington’s strategy to boost domestic battery production.
In 2025, China accounted for more than 80% of the world’s battery cell production. It also produced roughly 85% of cathode active materials and over 90% of anode active materials. The International Energy Agency reported these shares in its 2026 global electric vehicle outlook. Chinese manufacturers supplied nearly three-quarters of global electric vehicle battery deployment in 2025, showcasing their industrial scale from mineral refinement to final cell production and manufacturing equipment.
While the United States has managed to increase its battery manufacturing capacity at a faster percentage rate than China—growing by about 50% in lithium-ion nameplate capacity during 2025—it remains heavily reliant on imported materials. The country’s net import reliance for natural graphite reached 100% in 2025, with China ranked among its leading graphite suppliers over the previous four years, and Chinese processors controlling a dominant share in battery-grade graphite production.
China’s control over key segments of the battery supply chain persists
U.S. federal funding now targets these upstream vulnerabilities, along with efforts to boost battery assembly. On August 20, the U.S. Department of Energy announced $500 million for seven projects focusing on critical mineral processing, domestic battery manufacturing, and recycling. One initiative aims to process materials recovered from used lithium-ion batteries and manufacturing scrap, while others are dedicated to domestic processing and the development of alternative battery materials to strengthen U.S. supply chains.
Tariffs are also part of the strategy to reduce dependence on China. In 2024, tariffs on Chinese electric vehicle lithium-ion batteries increased to 25%, with similar tariffs on non-electric vehicle lithium-ion batteries rising to 25% in 2026. Additionally, natural graphite imports from China face a 25% tariff rate in 2026. These measures target critical points in the electric vehicle and energy-storage supply chains.
Battery technology collaborations remain under close watch
Partnerships in technology have added complexity to the U.S. battery industry. Ford Motor Co. is constructing a lithium iron phosphate battery plant in Michigan, utilizing licensed technology from CATL. Ford owns and operates the facility, while the Chinese battery producer supplies the licensed technology. U.S. authorities renewed their scrutiny of this partnership in September 2026. Lithium iron phosphate batteries are among the most China-dependent technologies, as Chinese companies dominate their production and key material supply chains.
The supply chain challenges extend beyond electric vehicles. In 2025, lithium iron phosphate batteries comprised over 90% of global stationary battery storage deployments. U.S. grid battery capacity continues to grow in tandem with domestic manufacturing investments. Nevertheless, most components are still imported, with China supplying a significant share of these materials. Addressing reliance on imports involves more than just building cell factories; it also requires strengthening processing capabilities, component production, graphite supply, and technical expertise within the U.S. battery supply infrastructure.