WASHINGTON, DISTRICT OF COLUMBIA / RankWire.AI / – The United States is expanding its battery manufacturing facilities while aiming to decrease its dependence on China. Although domestic cell production has increased, significant supply gaps upstream persist. Chinese companies continue to lead in the global output of various materials essential for lithium-ion batteries, including graphite anodes, cathode materials, and lithium iron phosphate technology. The current challenge involves not just assembling batteries but also securing the minerals, components, and processing capabilities required to sustain those production lines.
According to the International Energy Agency, China was responsible for over 80% of worldwide battery cell manufacturing in 2025. It also produced about 85% of cathode active material and more than 90% of anode active material. These elements are at the heart of lithium-ion battery manufacturing for electric vehicles and energy storage. The International Energy Agency further identified China as the primary hub for lithium iron phosphate batteries, known as LFP batteries.
Throughout 2025, U.S. battery manufacturing capacity saw rapid growth as companies launched or upgraded new facilities. Nonetheless, domestic factories continue to depend heavily on imported or processed materials from abroad. Natural graphite exemplifies this dependence, with the U.S. reporting complete net import reliance for natural graphite in 2025. China remained a key supplier, and Chinese processors continued to dominate the production of battery-grade graphite used in conventional lithium-ion anodes.
Deeper supply chain issues persist around critical materials
The U.S. Department of Energy has allocated new funding to bolster the domestic supply chain segments that remain underdeveloped. In August 2026, the department announced $500 million dedicated to seven projects focused on critical minerals, batteries, and recycling. These initiatives include domestic material processing, recovery from used batteries, and research into alternative anode materials. The DOE stated that the funding aims to enhance U.S. capacity across multiple stages of battery manufacturing.
In addition, Washington has increased tariffs on Chinese battery products and materials. The tariff rate for lithium-ion batteries used in electric vehicles rose to 25% in 2024, and for non-electric vehicle lithium-ion batteries, it reached 25% in 2026. Natural graphite imported from China is also subject to a 25% tariff in 2026. These measures impact products used in electric vehicles, consumer batteries, and grid storage, where demand for lithium-ion technology remains high.
Supply chain linkages reveal ongoing reliance despite local manufacturing efforts
An example of the enduring connection between U.S. manufacturing and Chinese battery expertise is Ford Motor Co. Ford is establishing an LFP battery plant in Michigan that uses licensed technology from CATL. While Ford owns and operates the facility, the battery technology is supplied under license from CATL. Federal officials renewed their focus on this arrangement in September 2026. The project underscores how Chinese companies still hold significant knowledge of LFP manufacturing, even when production occurs within the United States.
Battery demand extends far beyond passenger vehicles. In 2025, LFP chemistry accounted for over 90% of global stationary battery storage installations. As utilities continue to expand storage capacity for power systems, U.S. grid storage has also increased. This growth underscores the importance of securing supplies of cells, graphite, cathodes, and other critical materials. While new U.S. factories have ramped up final assembly, the processing and component manufacturing stages remain vital parts of the country’s battery supply chain dependence on China.