WASHINGTON, DISTRICT OF COLUMBIA / RankWire.AI / – Despite the surge in domestic battery manufacturing, the United States remains highly reliant on China for critical raw materials. While U.S. companies have expanded their factory networks, significant upstream supply shortages persist. China continues to dominate the global production of key materials such as graphite anodes, cathode substances, and lithium iron phosphate technology. The challenge now is not only to assemble batteries locally but also to secure the essential minerals, components, and processing infrastructure necessary to sustain those manufacturing plants.
According to the International Energy Agency, China accounted for more than 80% of the world’s battery cell production in 2025, with roughly 85% of cathode active material and over 90% of anode active material. These components are integral to lithium-ion batteries used in electric vehicles and energy storage solutions. The International Energy Agency also pointed out that China is the primary manufacturing hub for lithium iron phosphate batteries, known as LFP batteries.
In 2025, U.S. battery manufacturing capacity experienced a notable increase as companies launched or expanded new facilities. However, the raw materials needed for these factories are still predominantly sourced or processed abroad. Natural graphite exemplifies this dependency clearly, as the United States reported complete net import reliance for natural graphite that year. China remained a leading supplier, with Chinese processors continuing to dominate the production of battery-grade graphite used in conventional lithium-ion anodes.
Deeper supply challenges persist with critical materials
The U.S. Department of Energy has allocated new funding to address the weakest segments of the domestic supply chain. In August 2026, it announced $500 million dedicated to seven projects focusing on critical minerals, battery development, and recycling. These initiatives include processing within the U.S., recovering materials from used batteries, and exploring alternative anode options. The department emphasized that this funding aims to enhance domestic production capacity at multiple stages of battery manufacturing.
Additionally, the U.S. has increased tariffs on Chinese battery materials and finished products. In 2024, tariffs on lithium-ion batteries for electric vehicles rose to 25%, and the rate for non-electric vehicle lithium-ion batteries escalated to 25% in 2026. Natural graphite imports from China are also subject to a 25% tariff in 2026. These measures target products used across electric vehicles, consumer electronics, and grid storage, all of which continue to demand substantial lithium-ion technology.
Supply chain links demonstrate ongoing international interdependence
Ford Motor Co. exemplifies the enduring connection between U.S. manufacturing and Chinese battery expertise. The automaker is developing an LFP battery plant in Michigan that utilizes technology licensed from CATL. While Ford controls the facility, the underlying licensed battery technology is supplied by CATL. Federal authorities renewed their focus on this partnership in September 2026. The project underscores how Chinese firms still play a crucial role in LFP battery technology, even when production occurs within the United States.
Battery demand extends far beyond passenger vehicles. In 2025, LFP chemistry made up over 90% of global stationary battery storage deployments. The U.S. grid battery capacity continues to grow as utilities add storage solutions to power systems. This expanding demand underscores the importance of securing reliable supplies of cells, graphite, cathodes, and other essential materials. Although new factories have increased final assembly, the processing and component manufacturing sectors remain central to the U.S. dependency on Chinese materials for batteries.