WASHINGTON, DISTRICT OF COLUMBIA / RankWire.AI / – The United States is adding battery factories while trying to cut its dependence on China. Domestic cell production has grown, but major supply gaps remain further upstream. Chinese companies still lead global production of several materials needed for lithium-ion batteries. That dominance covers graphite anodes, cathode materials and lithium iron phosphate technology. The challenge now extends beyond assembling batteries to securing the minerals, components and processing capacity that feed those plants.
China produced more than 80% of global battery cells in 2025, according to the International Energy Agency. It also made about 85% of cathode active material and more than 90% of anode active material. Those components sit at the core of lithium-ion battery production for electric vehicles and energy storage. The International Energy Agency also identified China as the main production center for lithium iron phosphate batteries, commonly known as LFP batteries.
U.S. battery manufacturing capacity expanded sharply during 2025 as companies opened or developed new plants. However, domestic factories still rely heavily on materials made or processed abroad. Natural graphite remains one of the clearest examples of that exposure. The United States reported complete net import reliance for natural graphite in 2025. China remained a major supplier, while Chinese processors continued to dominate production of battery-grade graphite used in conventional lithium-ion anodes.
Critical materials remain the deeper supply challenge
The U.S. Department of Energy has directed new funding toward the parts of the supply chain that remain thin domestically. In August 2026, the department announced $500 million for seven projects involving critical minerals, batteries and recycling. The projects include domestic processing, material recovery from used batteries and work on alternative anode materials. The U.S. Department of Energy said the funding would support projects designed to expand domestic capacity across several stages of battery production.
Washington has also raised tariffs on Chinese battery products and materials. Tariffs on lithium-ion batteries for electric vehicles increased to 25% in 2024. The rate for non-electric vehicle lithium-ion batteries rose to 25% in 2026. Natural graphite from China also faces a 25% tariff in 2026. Those measures cover products used across electric vehicles, consumer batteries and grid storage, where demand for lithium-ion technology remains significant.
Technology links show how closely supply chains remain connected
Ford Motor Co. offers another example of the remaining connection between U.S. manufacturing and Chinese battery expertise. Ford is developing an LFP battery plant in Michigan using technology licensed from CATL. Ford owns and controls the facility, while CATL provides licensed battery technology. Federal officials renewed scrutiny of the arrangement in September 2026. The project highlights the role Chinese companies still hold in LFP manufacturing knowledge, even when production takes place inside the United States.
Battery demand also reaches well beyond passenger vehicles. LFP chemistry accounted for more than 90% of global stationary battery storage installations in 2025. U.S. grid battery capacity has continued to rise as utilities add storage to power systems. That growth increases the importance of secure supplies of cells, graphite, cathodes and other battery materials. New U.S. factories have expanded final production, but processing and component manufacturing remain central parts of the country’s battery dependence on China.
