How Much It Will Take To Challenge China’s Battery Dominance
The US government is investing $500 million to reduce dependence on China's dominant battery supply chain, but faces significant challenges in closing the gap. China controls most steps in battery production from raw material refining to finished EVs, with particular dominance in the critical midstream processing stages that the US severely lacks.
Summary
The US Department of Energy is awarding $500 million to seven companies to strengthen America's battery supply chain independence from China. China currently dominates nearly every stage of battery production: it accounts for the vast majority of graphite mining, controls most refining and processing of key battery minerals like graphite, cobalt, and lithium, produces 85% of cathode active material and over 90% of anode active material, manufactures 80% of battery cells, and produces 70% of the world's EVs. Chinese battery prices are also significantly cheaper than North American and European alternatives, with the price gap widening from 2022 to 2025.
The US has relative advantages in raw material sourcing through Canada and Australia, but is weakest in the midstream stages—processing raw materials into refined battery components and manufacturing battery cells. Selected American companies are targeting these gaps, with firms like Nth Cycle focusing on mineral refining from old batteries, CoreShell developing silicon-based anodes to replace graphite, and Lilac Solutions working on lithium extraction technology using novel methods to bypass China's processing bottleneck.
A critical challenge is demand sustainability. The battery industry requires continuous end-product demand to justify investments across the supply chain. The Inflation Reduction Act initially boosted confidence in battery industrial policy, but subsequent policy changes and expiration of EV purchase credits caused US EV sales to drop 36% year-over-year in Q4 2025, leading automakers to scale back EV manufacturing and resulting in nearly $24 billion of US battery projects being canceled between January 2025 and August 2026. Energy storage has grown as an alternative demand source but cannot fully replace EV demand due to different battery chemistry and performance requirements. Experts emphasize that a stable, consistent policy environment across administrations is essential for companies to risk billions on multi-year factory investments, and that a robust EV industry remains necessary to drive advanced battery technology development and high-volume production.
About this episode
The Department of Energy is investing $500 million in U.S. battery companies to challenge China’s dominance. But with $24 billion in projects already canceled since the administration first came into office, industry experts say closing the gap will be difficult. Chapters: 00:00 Introduction 01:07 Chapter 1: China’s dominance 04:05 Chapter 2: Gaps and slowdowns Produced by: Robert Ferris Edited by: Marisa Forziati Animations: Andrea Schmitz, Jason Reginato Senior Managing Producer: Tala Hadavi Additional Footage: Getty Images, Natalie Rice, Lilac Solutions » Subscribe to CNBC: https://cnb.cx/SubscribeCNBC » Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision About CNBC: From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more. Want to get ahead at work? Then you need to learn how to make effective small talk. In CNBC’s new online course, How To Talk To People At Work, expert instructors teach you how to use everyday conversation to gain visibility, build meaningful relationships and advance your career. Sign up now: https://cnb.cx/4sGlSkh Connect with CNBC News Online Get the latest news: https://www.cnbc.com/ Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBC Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC Follow CNBC on Threads: https://cnb.cx/threads Follow CNBC News on X: https://cnb.cx/FollowCNBC Follow CNBC on WhatsApp: https://cnb.cx/WhatsAppCNBC #CNBC How Much It Will Take To Challenge China’s Battery Dominance
Key Insights
- China's share of mineral refining has actually grown since 2020, and the International Energy Agency identified the lack of investment in midstream stages as a growing risk to global supply security
- US EV sales fell 36% year-over-year in Q4 2025 following expiration of federal EV purchase credits and policy changes, causing battery investment to pull back and nearly $24 billion of US battery projects to be canceled
- A stable policy environment that doesn't shift between administrations is described as the single most critical thing for successful industrial policy, more so than the direct government funding
Topics
Transcript
[0:00] The US government is spending hundreds of millions of dollars to loosen China's grip on what many say is the key energy tech of the future: batteries. The Department of Energy is awarding $500 million to seven companies to "secure America's battery supply chain". It's the Trump administration's first investment in battery technology that uses two multibillion dollar federal programs. Many of these companies do things that would specifically reduce reliance on China if successful. But the country dominates much of the global battery [0:30] supply chain everything from refining to component manufacturing, all the way to finished products like EVs. China didn't just build a mineral super powerhouse. They also built the BYD powerhouse, right? So all those…
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