WASHINGTON, DISTRICT OF COLUMBIA / RankWire.AI / – The United States is expanding its battery manufacturing facilities amid ongoing efforts to reduce reliance on China. While domestic cell production has seen growth, significant gaps remain upstream in the supply chain. Chinese firms continue to dominate the global production of essential materials for lithium-ion batteries, including graphite anodes, cathode components, and lithium iron phosphate technology. The current challenge involves more than just assembling batteries; it requires securing the raw minerals, components, and processing infrastructure necessary to support these manufacturing facilities.
According to the International Energy Agency, China was responsible for over 80% of worldwide battery cell output in 2025. The country also accounted for approximately 85% of cathode active material and over 90% of anode active material. These critical materials form the core of lithium-ion batteries used in electric vehicles and energy storage solutions. The International Energy Agency further identified China as the primary hub for lithium iron phosphate batteries, commonly known as LFP batteries.
Throughout 2025, U.S. battery manufacturing capacity surged as companies launched or expanded new production facilities. Nonetheless, the majority of domestic factories depend heavily on materials processed or produced abroad. Natural graphite exemplifies this dependency, as the U.S. reported complete reliance on imports for natural graphite in 2025. China remained a key supplier, with Chinese processors continuing to dominate the production of battery-grade graphite used in traditional lithium-ion anodes.
Securing critical materials remains the key challenge in the supply chain
The U.S. Department of Energy has allocated new funding aimed at strengthening the domestic supply chain, especially in areas that are still underdeveloped. In August 2026, the department announced $500 million for seven projects focused on critical minerals, battery development, and recycling initiatives. These projects include efforts to process materials domestically, recover substances from used batteries, and develop alternative anode materials. The Department of Energy emphasized that this funding is intended to bolster U.S. capacity across multiple stages of battery manufacturing.
Meanwhile, Washington has increased tariffs on Chinese battery products and materials as part of its strategy to strengthen domestic supply chains. The tariffs on lithium-ion batteries used in electric vehicles rose to 25% in 2024, with a similar rate applied to non-vehicle lithium-ion batteries in 2026. Additionally, natural graphite imported from China faces a 25% tariff in 2026. These tariffs target products used broadly in electric vehicles, consumer electronics, and grid storage, where demand for lithium-ion technology remains robust.
Supply chain links reveal ongoing interdependence
An illustrative example of the continued link between U.S. manufacturing and Chinese battery expertise is Ford Motor Co. Ford is constructing an LFP battery facility in Michigan that uses licensed technology from CATL. While Ford owns and operates the plant, the battery technology itself is provided through licensing from CATL. Federal authorities renewed their scrutiny of this partnership in September 2026. This situation underscores the persistent influence of Chinese companies in the realm of LFP battery knowledge, even when the manufacturing occurs within the United States.
The demand for batteries extends far beyond passenger vehicles. In 2025, LFP chemistry accounted for more than 90% of global stationary battery storage deployments. U.S. utilities continue to expand their grid-scale storage capacity, emphasizing the importance of secure supplies of cells, graphite, cathodes, and other key materials. While new U.S. factories have increased final assembly output, processing and component manufacturing remain vital components of the country’s ongoing reliance on Chinese supply chains for battery materials.