WASHINGTON, DISTRICT OF COLUMBIA / RankWire.AI / – In the process of increasing its battery manufacturing capacity, the United States continues to face reliance on China. While domestic cell production has seen growth, significant supply deficiencies further upstream persist. Chinese firms maintain leadership in the global extraction and processing of several key materials essential for lithium-ion batteries. Their dominance encompasses graphite anodes, cathode components, and lithium iron phosphate technology. The current challenge extends beyond mere assembly, requiring securing the minerals, raw materials, and processing infrastructure that support those manufacturing facilities.
According to the International Energy Agency, China accounted for over 80% of worldwide battery cell production in 2025. The country also supplied approximately 85% of cathode active materials and over 90% of anode active materials. These critical components underpin the manufacturing of lithium-ion batteries used in electric vehicles and energy storage solutions. The International Energy Agency further identified China as the primary producer of lithium iron phosphate batteries, often referred to as LFP batteries.
During 2025, U.S. battery manufacturing capacity experienced rapid growth as companies launched or expanded new facilities. Nevertheless, the majority of the raw materials and components used domestically are still sourced from abroad. Natural graphite exemplifies this dependency, as the U.S. reported complete reliance on imports for this material in 2025. China continued to be a key supplier, with Chinese processing companies dominating the production of battery-grade graphite used in traditional lithium-ion anodes.
Securing Raw Materials Remains the Core Supply Challenge
The U.S. Department of Energy is channeling new funds into segments of the supply chain that are still underdeveloped within the country. In August 2026, the department announced an allocation of $500 million dedicated to seven initiatives focused on critical minerals, battery development, and recycling efforts. These projects aim to boost domestic processing, recover materials from used batteries, and explore alternative anode materials. The Department emphasizes that this funding will help increase national capacity across multiple stages of battery manufacturing.
Washington has also implemented higher tariffs on Chinese battery products and materials. The tariff on lithium-ion batteries for electric vehicles increased to 25% in 2024, with a further rise to 25% for non-electric vehicle lithium-ion batteries in 2026. Natural graphite from China faces a 25% tariff also set for 2026. These measures impact products used in electric vehicles, consumer electronics, and grid storage, where the demand for lithium-ion solutions remains high.
Supply Chain Interconnections Highlight Ongoing Dependencies
Ford Motor Co. exemplifies the persistent ties between U.S. manufacturing and Chinese battery expertise. The automaker is establishing an LFP battery facility in Michigan that utilizes licensed technology from CATL. Ford owns and manages the plant, while CATL supplies the proprietary battery technology. Federal officials revisited this arrangement in September 2026, underscoring the continued influence Chinese companies have on LFP battery knowledge, despite production occurring within the United States.
Battery demand extends well beyond the automotive sector. In 2025, LFP chemistry made up more than 90% of the global stationary battery storage deployments. As utilities expand their energy storage capacity to support power systems, the importance of secure supplies of cells, graphite, cathodes, and other materials grows. While new domestic factories have increased final battery production, the processing and manufacturing of components remain central to the country’s ongoing dependence on Chinese raw materials and technology.