WASHINGTON, DISTRICT OF COLUMBIA / RankWire.AI / – As the United States ramps up its battery manufacturing capabilities, it continues to depend significantly on China. While domestic cell production has seen growth, critical upstream supply shortages persist. Chinese firms dominate the global supply of key materials for lithium-ion batteries, including graphite anodes, cathode components, and lithium iron phosphate technology. The current challenge extends beyond just assembling batteries to securing essential minerals, raw materials, and processing capacities to sustain those manufacturing operations.
In 2025, China accounted for over 80% of global battery cell production, according to the International Energy Agency. It also produced roughly 85% of cathode active materials and more than 90% of anode active materials. These elements are fundamental to lithium-ion battery manufacturing for electric vehicles and energy storage systems. The agency further identified China as the primary hub for producing lithium iron phosphate batteries, also known as LFP batteries.
Throughout 2025, U.S. battery manufacturing capacity expanded rapidly, with many companies opening or developing new facilities. Nevertheless, the nation’s factories continue to heavily depend on imported or foreign-processed materials. Natural graphite exemplifies this vulnerability, as the U.S. reported complete reliance on imports for this mineral in 2025. China remained a key supplier, and Chinese processors maintained dominance in producing 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 funds to address areas within the supply chain still lacking robust domestic capabilities. In August 2026, it announced a $500 million investment in seven projects focused on critical minerals, battery development, and recycling initiatives. These projects aim to enhance domestic processing, recover materials from used batteries, and explore alternative anode materials. The department emphasizes that this funding is intended to boost U.S. capacity across multiple stages of battery manufacturing.
Additionally, Washington has increased tariffs on Chinese battery components and raw materials. Tariffs on lithium-ion batteries for electric vehicles rose to 25% in 2024, and in 2026, the rate for non-vehicle lithium-ion batteries climbed to 25%. China’s natural graphite also faces a 25% tariff in 2026. These measures impact products used in electric vehicles, consumer electronics, and grid storage, where demand for lithium-ion technology remains high.
Supply chain connections highlight ongoing dependencies
An example of the persistent links between U.S. manufacturing and Chinese battery expertise is Ford Motor Co., which is developing an LFP battery plant in Michigan utilizing licensed technology from CATL. Ford owns and manages the facility, while CATL supplies the licensed battery technology. Federal regulators revisited this arrangement in September 2026, underscoring the continued influence Chinese companies have on LFP manufacturing knowledge, even when production occurs within the United States.
Battery demand extends far beyond passenger vehicles. In 2025, LFP chemistry represented over 90% of global stationary storage installations. As U.S. utilities continue to expand grid storage capacity, the importance of securing supplies of cells, graphite, cathodes, and other key materials grows. While new U.S. factories have increased final assembly output, processing and component manufacturing remain central to the country’s ongoing dependence on Chinese-origin materials.