WASHINGTON, DISTRICT OF COLUMBIA / RankWire.AI / – The United States is boosting its domestic battery manufacturing capacity to lessen reliance on China. However, the real challenge lies deeper within the supply chain. China continues to hold a dominant position in the supply of battery materials, their processing, and essential manufacturing technologies used worldwide. While American factories have expanded their capacity, many still depend on imported components and refined minerals. This gap places graphite, cathodes, anodes, and lithium iron phosphate materials at the core of Washington’s battery development strategy.
In 2025, China produced over 80% of the world’s battery cells. It also accounted for roughly 85% of cathode active material and more than 90% of anode active material. According to the International Energy Agency, these figures were reported in its 2026 global electric vehicle outlook. Chinese manufacturers supplied nearly three-quarters of global electric vehicle battery deployment in 2025, with their industrial scale extending from mineral processing to finished cells and manufacturing equipment.
While the U.S. has increased its battery manufacturing capacity at a faster rate in percentage terms, it remains significantly dependent on imported raw materials. In 2025, the United States reported 100% net import reliance for natural graphite. China has been among its top graphite suppliers over the previous four years, with Chinese processors dominating the market for battery-grade graphite production.
China maintains control over the most critical segments of the battery supply chain
Federal funding initiatives now target these upstream vulnerabilities alongside efforts to expand battery assembly. On Aug. 20, the U.S. Department of Energy announced $500 million allocated for seven projects. These projects focus on critical mineral processing, battery manufacturing, and recycling within the United States. One initiative aims to refine materials recovered from used lithium-ion batteries and manufacturing scrap, while others concentrate on domestic processing and developing alternative battery materials to enhance U.S. supply resilience.
Tariffs are also part of the strategy to shift sourcing away from China. The U.S. increased tariffs on Chinese electric vehicle lithium-ion batteries to 25% in 2024, with tariffs on non-electric vehicle lithium-ion batteries rising to 25% in 2026. Additionally, natural graphite imports from China face a 25% tariff rate starting in 2026. These measures target critical points in the electric vehicle and energy-storage supply chains.
Focus remains on the technology partnerships shaping the U.S. battery sector
The debate over battery technology partnerships has added a new layer to America’s strategic considerations. Ford Motor Co. is constructing a lithium iron phosphate battery plant in Michigan that uses licensed technology from CATL. Ford owns and manages the facility, while the Chinese battery manufacturer supplies the licensed technology. U.S. officials renewed their scrutiny of this arrangement in September 2026. Lithium iron phosphate batteries are among the most China-dependent technologies because Chinese firms dominate both their production and key material supply chains.
This supply challenge extends beyond electric vehicles. In 2025, lithium iron phosphate batteries made up more than 90% of the world’s stationary battery storage installations. U.S. grid battery capacity continues to grow with domestic manufacturing investments, yet most components are still imported, with China supplying a significant portion of those materials. Addressing dependence, therefore, involves more than just building cell factories; it also requires strengthening processing capabilities, component manufacturing, graphite supply, and technical expertise across the entire U.S. battery supply chain.