WASHINGTON, DISTRICT OF COLUMBIA / RankWire.AI / – As the United States expands its battery manufacturing facilities, it still grapples with reducing dependence on China. While local production of battery cells has increased, significant supply chain gaps remain upstream. Chinese firms continue to dominate the production of several key materials necessary for lithium-ion batteries, including graphite anodes, cathode compounds, and lithium iron phosphate technology. The current challenge involves not only assembling batteries but also securing the minerals, components, and processing capacity that supply those manufacturing plants.
In 2025, China was responsible for over 80% of global battery cell output, according to the International Energy Agency. It also produced approximately 85% of cathode active material and more than 90% of anode active material. These critical components are central to lithium-ion battery production for electric vehicles and energy storage systems. The agency further identified China as the main producer of lithium iron phosphate batteries, often referred to as LFP batteries.
Throughout 2025, U.S. battery manufacturing capacity experienced rapid growth with new plants opening or existing ones expanding. Nonetheless, the majority of domestically produced materials still originate from overseas processing or are imported. Natural graphite exemplifies this ongoing reliance, as the United States reported complete net import dependence for it in 2025. China continued to be a primary supplier, with Chinese processors maintaining dominance in the production of battery-grade graphite used in traditional lithium-ion anodes.
Deeper supply chain issues persist with critical materials
The U.S. Department of Energy has allocated new funds targeting areas within the supply chain that remain underdeveloped domestically. In August 2026, it announced $500 million for seven projects focused on critical minerals, battery technology, and recycling initiatives. These initiatives include domestic processing, recovering materials from used batteries, and developing alternative anode options. According to the Department of Energy, this funding aims to bolster U.S. capacity at multiple stages of battery production.
Additionally, Washington has increased tariffs on Chinese battery-related products and materials. In 2024, tariffs on lithium-ion batteries used in electric vehicles rose to 25%, with the same rate applying to non-electric vehicle lithium-ion batteries in 2026. Natural graphite imported from China is also subject to a 25% tariff in 2026. These measures affect products utilized in electric vehicles, consumer batteries, and grid storage, where demand for lithium-ion technology remains high.
Supply chain connections reveal ongoing technological dependencies
An example demonstrating the enduring link between U.S. manufacturing and Chinese battery expertise is Ford Motor Co. Ford is establishing an LFP battery plant in Michigan utilizing licensed technology from CATL. While Ford owns and operates the facility, the underlying battery technology is provided through licensing from CATL. Federal officials renewed their examination of this arrangement in September 2026. The project underscores the continuing influence Chinese firms hold over LFP battery manufacturing knowledge, even when production occurs within the United States.
Battery demand extends far beyond the automotive sector. In 2025, more than 90% of global stationary battery storage installations relied on LFP chemistry. U.S. grid battery capacity has steadily increased as utility companies add storage solutions to their power networks. This growth emphasizes the importance of ensuring reliable supplies of cells, graphite, cathodes, and other essential materials. Though new U.S. factories have scaled up final assembly, processing and component manufacturing remain central to the country’s ongoing reliance on Chinese materials for battery production.