U.S. battery supply chain lags China despite $500 million DOE push

U.S. battery supply chain lags China despite $500 million DOE push

Tue, September 8, 2026 at 9:02 PM GMT+3 3 min read

The Department of Energy awarded $500 million in August to seven companies working on battery minerals, manufacturing, and recycling — but analysts and executives say the funding falls far short of what would be needed to meaningfully reduce China's grip on the global battery supply chain, according to CNBC.

The awards mark the opening disbursement from two DOE programs — each funded at $3 billion and established under the Biden-era Infrastructure Investment and Jobs Act — that the Trump administration has now begun drawing on. The administration has also ended federal tax credits for electric vehicles and reversed other Biden-era battery and EV policies. Atlas Public Policy data, cited by CNBC, shows that roughly $24 billion worth of battery projects announced since January 2025 have since been scrapped.

According to the International Energy Agency, China accounts for roughly 85% of global EV battery cathode active material production, over 90% of anode active material, and four-fifths of all battery cells manufactured worldwide. It also dominates the refining stage: 95% of spodumene — a mineral form of lithium extracted from hard rock mines — is processed in China, according to Raef Sully, CEO of Lilac Solutions, one of the DOE grant recipients.

"It takes decades and tens, if not hundreds of billions of dollars" to build the kind of supply chain scale China now has, Tu Le, founder and managing director of Sino Auto Insights, said. "We don't have decades. We have five, six, seven years to try to become competitive."

Some of the DOE-funded companies are targeting specific points in the supply chain where China holds an advantage. Coreshell Technologies, awarded $50 million, produces its battery anodes using silicon mined in the United States, sidestepping the Chinese graphite that most manufacturers rely on. Lilac Solutions took in $100 million; the company uses a technique that pulls lithium out of saline water, allowing it to skip the processing stage that Sully said China has "a chokehold on."

Richard Wang, CEO of Voya Energy, said China's CATL — the world's largest EV and energy storage battery manufacturer — has built a lead in technology and manufacturing that is difficult to match. "They are one of the only battery companies in the world that's not only high in revenue, but is significantly profitable because of how strong their manufacturing and supply chain capabilities are," Wang said.

The gap in EV adoption compounds the challenge. In July, new energy vehicles — a category that spans hybrids, battery-electrics, and extended-range models — captured 65% of Chinese passenger car sales, according to the China Passenger Car Association, a share that dwarfs the roughly 24% of U.S. sales recorded for electrified vehicles in the second quarter of 2026, per the Energy Information Administration.

China's dominance over refining has grown even as governments have pledged for years to build alternatives, a pattern rooted in the structural bottlenecks limiting battery supply chains. Most of the world's lithium ore is mined outside China but shipped there for processing — a dependency that China reinforced in 2025 when it imposed export controls on rare earths and other minerals.

Sully said the DOE funding is a start. "Early days, but a step in the right direction," he said, adding that the U.S. could see more domestic lithium, cathode material, and battery cell production over the next decade.