WASHINGTON, DISTRICT OF COLUMBIA / RankWire.AI / – The United States is increasing its number of battery manufacturing facilities while attempting to reduce its reliance on China. Although domestic cell production has seen growth, significant supply gaps persist upstream. Chinese companies continue to dominate the global output of several key materials essential for lithium-ion batteries. This dominance encompasses graphite anodes, cathode materials, and lithium iron phosphate technology. The challenge now goes beyond simply assembling batteries; it involves securing the minerals, components, and processing capabilities that supply these manufacturing plants.
In 2025, China accounted for over 80% of worldwide battery cell production, according to the International Energy Agency. It also produced roughly 85% of cathode active materials and more than 90% of anode active materials. These components are fundamental to the production of lithium-ion batteries used in electric vehicles and energy storage systems. The agency further identified China as the primary producer of lithium iron phosphate batteries, also known as LFP batteries.
Throughout 2025, the U.S. significantly expanded its battery manufacturing capacity by opening or upgrading numerous plants. Nonetheless, reliance on imported or processed materials remains high. Natural graphite exemplifies this ongoing dependency. The United States reported complete net import reliance for natural graphite in 2025, with China remaining a key supplier. Chinese processors continue to dominate the production of battery-grade graphite used in traditional lithium-ion anodes.
Securing Critical Materials Continues as a Major Supply Challenge
The U.S. Department of Energy has allocated new funding to address areas within the supply chain that remain underdeveloped domestically. In August 2026, the department announced $500 million dedicated to seven projects focusing on critical minerals, battery development, and recycling. These initiatives include domestic material processing, recovery of components from used batteries, and research into alternative anode materials. The DOE stated that this funding aims to bolster domestic capacity across multiple stages of battery manufacturing.
Washington has also increased tariffs on Chinese-origin battery products and materials. The tariff on lithium-ion batteries for electric vehicles was raised to 25% in 2024, and in 2026, the rate for non-electric vehicle lithium-ion batteries increased to 25%. Additionally, natural graphite from China faces a 25% tariff in 2026. These measures impact products used in electric vehicles, consumer batteries, and grid storage, all of which continue to see high demand for lithium-ion technology.
Supply Chain Connections Highlight Technology and Production Ties
Ford Motor Co. exemplifies the persistent connection between U.S. manufacturing and Chinese battery expertise. Ford is establishing an LFP battery plant in Michigan utilizing technology licensed from CATL. While Ford owns and manages the facility, CATL supplies the licensed battery technology. Federal officials renewed their focus on this partnership in September 2026. This project underscores how Chinese companies still hold critical knowledge in LFP battery production, even when manufacturing occurs within the United States.
Battery demand extends far beyond the passenger vehicle sector. In 2025, LFP chemistry made up more than 90% of global stationary battery storage deployments. U.S. grid storage capacity continues to grow as utilities enhance their power systems with more storage solutions. This expansion emphasizes the importance of reliable supplies of cells, graphite, cathodes, and other battery materials. Although new factories in the U.S. have increased final assembly, processing and component manufacturing remain vital and continue to underpin America’s dependence on Chinese materials for its battery needs.