The U.S. is trying to reduce its reliance on China for batteries. Here's what it's up against

• China controls 95% of spodumene (lithium-bearing rock) processing, giving it a chokehold on the critical refining stage that U.S. companies like Lilac Solutions ($100M grant) are trying to bypass with alternative extraction methods
• EVs and hybrids reached 65% of new car sales in China versus only 24% in the U.S., with China selling about 30 million vehicles in 2025 compared to 16.3 million in the U.S., widening the competitive gap
• Experts estimate the U.S. has only 5-7 years to become competitive rather than the decades it took China to build its supply chain, while Trump administration policies have reversed Biden-era EV and battery manufacturing support

Summary

Key Facts and Figures

The U.S. Department of Energy awarded $500 million in August to seven battery-related companies as part of a $3 billion program created under the Biden-era Infrastructure Investment and Jobs Act. However, since Trump took office in January 2025, nearly $24 billion in announced battery projects have been canceled. Analysts estimate it would take "tens, if not hundreds of billions of dollars" and decades to match China's supply chain scale.

China's Market Dominance

China controls critical segments of the battery supply chain:

• 95% of spodumene (lithium-bearing rock) processing
• 85% of global EV battery cathode active material
• 90%+ of anode active material
• 80% of global battery cell production

The global lithium market grew from 150,000 metric tons (2015) to 1.5 million metric tons (2025). China leveraged this dominance by imposing export controls on rare earths and minerals in 2025.

Companies and Developments

Coreshell Technologies ($50 million grant) produces battery anodes from domestic silicon, avoiding Chinese graphite. Lilac Solutions ($100 million) extracts lithium from brine, bypassing Chinese-dominated refining processes. Chinese manufacturer CATL remains the world's largest battery producer with superior profitability.

Market Implications

"New energy vehicles" represented 65% of China's July car sales versus 24% in the U.S. (Q2 2026). U.S. total vehicle sales reached 16.3 million (2025) compared to China's significantly larger market. Energy storage demand has averaged 70% annual growth since 2022, with EVs accounting for over 70% of lithium-ion battery deployment. The funding gap threatens U.S. automakers' global competitiveness as China captures the "lion's share" of international markets.