WASHINGTON, DISTRICT OF COLUMBIA / RankWire.AI / – In 2025, China was responsible for over 80% of the world’s battery cell production, according to the International Energy Agency. The country also supplied roughly 85% of cathode active material and more than 90% of anode active material. These critical components are essential for manufacturing lithium-ion batteries used in electric vehicles and energy storage solutions. The International Energy Agency further identified China as the leading producer of lithium iron phosphate batteries, commonly referred to as LFP batteries.
While U.S. battery manufacturing capacity saw significant growth in 2025 with the opening and expansion of various plants, the industry remains highly dependent on imported or processed materials from abroad. Natural graphite exemplifies this vulnerability, as the United States reported complete reliance on imports for this material in 2025. China continued to be a primary supplier, and Chinese processors maintained dominance in the production of battery-grade graphite used in standard lithium-ion anodes.
Addressing the Deeper Supply Chain Challenges for Critical Materials
The U.S. Department of Energy has allocated new funding aimed at strengthening the parts of the supply chain that remain underdeveloped domestically. In August 2026, it announced $500 million for seven projects focused on critical minerals, battery development, and recycling efforts. These initiatives include processing domestically sourced materials, recovering substances from used batteries, and exploring alternative anode materials. According to the department, this funding aims to boost domestic manufacturing capacity at various stages of battery production.
Washington has also increased tariffs on Chinese-made battery products and raw materials. The tariff on lithium-ion batteries for electric vehicles rose to 25% in 2024, and in 2026, the rate for non-vehicle lithium-ion batteries increased to 25%. Natural graphite from China faces a 25% tariff as well in 2026. These trade measures affect products across the electric vehicle market, consumer batteries, and grid storage, where demand for lithium-ion technology remains high.
Supply Chain Interconnections Revealed Through Technology Transfers
An example illustrating the ongoing relationship between U.S. manufacturing and Chinese battery expertise is Ford Motor Co.’s development of an LFP battery plant in Michigan, which utilizes licensed technology from CATL. While Ford owns and manages the facility, CATL supplies the licensed battery technology. In September 2026, federal officials renewed scrutiny of this arrangement. The project underscores how Chinese companies still hold substantial knowledge of LFP battery production, even when manufacturing occurs within the United States.
Battery demand extends far beyond passenger vehicles. In 2025, LFP chemistry comprised over 90% of global stationary battery storage deployments. The capacity of U.S. grid batteries continues to grow as utilities enhance energy storage capabilities. As demand for these batteries increases, securing supply chains for cells, graphite, cathodes, and other essential materials becomes more critical. Although new factories in the U.S. have increased final assembly, processing and component manufacturing remain vital to the country’s reliance on Chinese supply chains for battery materials.