WASHINGTON, DISTRICT OF COLUMBIA / RankWire.AI / – While the United States is expanding its battery manufacturing facilities and working to reduce reliance on China, the supply chain challenges persist. Domestic cell production has increased, yet significant upstream material shortages remain. Chinese firms continue to dominate the global supply of several key materials essential for lithium-ion batteries, including graphite anodes, cathode materials, and lithium iron phosphate technology. The current challenge extends beyond simply assembling batteries to securing the necessary minerals, components, and processing capacity that support these manufacturing plants.
According to the International Energy Agency, China accounted for over 80% of the world’s battery cell production in 2025. The country also produced approximately 85% of cathode active material and more than 90% of anode active material. These components are fundamental to lithium-ion batteries used in electric vehicles and energy storage systems. The International Energy Agency also identified China as the primary hub for lithium iron phosphate batteries, often referred to as LFP batteries.
In 2025, the U.S. saw a significant expansion in battery manufacturing capacity as firms launched or advanced new facilities. Despite this growth, domestic operations still heavily depend on imported or processed materials from abroad. Natural graphite exemplifies this dependency clearly, with the U.S. reporting complete net import reliance for natural graphite in 2025. China remained a major supplier, and Chinese processors continued to dominate the production of battery-grade graphite used in traditional lithium-ion anodes.
Addressing the Deeper Supply Chain Challenges of Critical Materials
The U.S. Department of Energy has allocated new funds toward the parts of the supply chain that are still underdeveloped domestically. In August 2026, the department announced a $500 million investment supporting seven projects focused on critical minerals, batteries, and recycling. These initiatives include domestic processing, recovery of materials from used batteries, and research into alternative anode materials. The U.S. Department of Energy explained that this funding aims to bolster domestic capacity across multiple stages of battery manufacturing.
Additionally, Washington has increased tariffs on Chinese-made battery products and materials. In 2024, tariffs on lithium-ion batteries for electric vehicles rose to 25%, and this rate for non-electric vehicle lithium-ion batteries increased to 25% in 2026. Natural graphite imported from China is also subjected to a 25% tariff in 2026. These measures impact products used in electric vehicles, consumer batteries, and grid storage, where demand for lithium-ion technology remains strong.
Interconnected Supply Chains Demonstrated by Technological Ties
Ford Motor Co. provides an example of the ongoing connection between U.S. manufacturing and Chinese battery expertise. Ford is constructing an LFP battery facility in Michigan that utilizes licensed technology from CATL. While Ford owns and manages the plant, CATL supplies the licensed battery technology. Federal officials renewed scrutiny of this arrangement in September 2026. The project underscores the continued influence Chinese companies have over LFP manufacturing knowledge, even when production occurs within the United States.
Battery demand extends well beyond passenger vehicles, with LFP chemistry accounting for over 90% of global stationary storage installations in 2025. U.S. utility companies have continued to increase grid storage capacity to support power systems. This growth amplifies the importance of securing supplies of cells, graphite, cathodes, and other battery materials. Although new U.S. factories have expanded final assembly, processing, and component manufacturing still play a central role in the country’s reliance on Chinese materials.