WASHINGTON, DISTRICT OF COLUMBIA / RankWire.AI / – In the United States, as new battery manufacturing facilities emerge in 2025 and beyond, the country continues to grapple with dependence on China for critical materials. While domestic cell production has seen notable increases, significant upstream supply shortages persist. Chinese firms remain dominant in producing key materials necessary for lithium-ion batteries, including graphite anodes, cathode components, and lithium iron phosphate technology. The current challenge extends beyond the assembly line, focusing on securing the minerals, parts, and processing capacity essential to sustain these manufacturing plants.
According to the International Energy Agency, over 80% of the world’s battery cells were produced in China in 2025. It also supplied about 85% of cathode active material and more than 90% of anode active material. These core components are vital for the manufacturing of lithium-ion batteries used in electric vehicles and energy storage systems. The International Energy Agency further identified China as the leading hub for lithium iron phosphate batteries, often referred to as LFP batteries.
Throughout 2025, U.S. battery manufacturing capacity saw rapid growth as companies established new plants or expanded existing ones. Despite this progress, the industry remains heavily reliant on imported or processed materials from abroad. Natural graphite exemplifies this vulnerability; in 2025, the U.S. reported complete reliance on imports for this material. China remained a primary supplier, with Chinese processors continuing to dominate the production of battery-grade graphite used in traditional lithium-ion anodes.
Securing critical materials remains a major supply chain hurdle
The U.S. Department of Energy has allocated new funding aimed at strengthening the domestic supply chain, which still depends heavily on foreign sources. In August 2026, the department announced a $500 million investment in seven projects focused on critical minerals, battery development, and recycling initiatives. These projects encompass domestic material processing, recycling from used batteries, and research into alternative anode materials. The DOE emphasized that this funding aims to boost U.S. capacity at multiple stages of battery manufacturing.
Meanwhile, Washington has increased tariffs on Chinese battery components and materials. Lithium-ion batteries for electric vehicles now face a 25% tariff as of 2024, with the same rate applying to non-vehicle lithium-ion batteries in 2026. Additionally, Chinese natural graphite is subject to a 25% tariff starting in 2026. These measures target products used in electric vehicles, consumer batteries, and grid storage, sectors where demand for lithium-ion technology remains robust.
Supply chain ties reveal ongoing Chinese influence in battery technology
An illustrative case is Ford Motor Co., which demonstrates how U.S. manufacturing still depends on Chinese expertise in battery technology. Ford is developing an LFP battery plant in Michigan that licenses technology from CATL. While Ford owns and operates the facility, the battery technology is supplied under license by CATL. Federal officials renewed their focus on this partnership in September 2026. This project underscores the continued importance of Chinese companies’ knowledge in LFP manufacturing, even when production is located within the United States.
The demand for batteries extends far beyond passenger vehicles. In 2025, LFP chemistry accounted for over 90% of the world’s stationary battery storage installations. U.S. utility companies have continued to expand their energy storage capacities, emphasizing the need for reliable supplies of cells, graphite, cathodes, and other essential materials. Although new domestic factories have increased final assembly output, processing and component manufacturing remain central to the country’s ongoing dependency on Chinese supply chains for battery materials.