WASHINGTON, DISTRICT OF COLUMBIA / RankWire.AI / – While the United States ramps up new battery manufacturing facilities in an effort to reduce dependence, the country continues to rely heavily on China for key upstream materials. Although domestic cell production has increased, significant gaps remain in the supply chain, especially in the processing of critical materials. Chinese firms maintain dominance in the global market for several essential components of lithium-ion batteries, including graphite anodes, cathode materials, and lithium iron phosphate (LFP) technology. The challenge now extends beyond just assembling batteries to securing the raw minerals, processing capacity, and components necessary to sustain production.
In 2025, China accounted for over 80% of worldwide battery cell production, as reported by the International Energy Agency. It also produced roughly 85% of cathode active material and more than 90% of anode active material. These components are fundamental to the manufacturing of lithium-ion batteries used in electric vehicles and energy storage systems. Additionally, the International Energy Agency identified China as the primary producer of lithium iron phosphate batteries, often referred to as LFP batteries.
Despite a significant surge in U.S. battery manufacturing capacity in 2025, with companies establishing or expanding facilities, the nation remains heavily dependent on imported materials. Natural graphite exemplifies this dependency, with the U.S. reporting complete net import reliance for natural graphite in 2025. China continues to be a dominant supplier, and Chinese processors maintain control over the production of battery-grade graphite used in conventional lithium-ion anodes.
Deeper supply chain challenges persist for critical materials
The U.S. Department of Energy has allocated new funding to strengthen the parts of the supply chain that are still underdeveloped domestically. 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, recovering resources from used batteries, and exploring alternative anode materials. The DOE emphasized that this funding aims to expand the country’s capacity across multiple stages of battery manufacturing.
Washington has also increased tariffs on Chinese battery products and materials. In 2024, tariffs on lithium-ion batteries for electric vehicles rose to 25%, and by 2026, the rate for non-electric vehicle lithium-ion batteries also hit 25%. Chinese-origin natural graphite faces a 25% tariff in 2026. These measures target products used across electric vehicles, consumer batteries, and grid storage, where demand for lithium-ion solutions remains robust.
Supply chain interconnections reveal ongoing technological dependencies
Ford Motor Co. illustrates the ongoing link between U.S. manufacturing and Chinese battery technology. The automaker is establishing an LFP battery plant in Michigan that utilizes licensed technology from CATL. While Ford owns and controls the facility, CATL supplies the licensed battery tech. In September 2026, federal officials renewed their focus on this arrangement. The project underscores how Chinese companies still possess crucial knowledge in LFP battery manufacturing, even when production occurs within the United States.
Demand for batteries extends far beyond passenger vehicles. In 2025, LFP chemistry made up more than 90% of global stationary energy storage installations. As utilities in the U.S. continue to add grid storage capacity, the importance of securing supplies of cells, graphite, cathodes, and other essential battery materials increases. While new factories have expanded final assembly, processing and component manufacturing remain vital parts of America’s ongoing dependence on Chinese raw materials.