The Trump administration is trying to build up the U.S. battery supply chain and reduce dependence on China. But analysts and executives who spoke to CNBC said the funding set aside for this effort is small compared to what would be needed to significantly loosen China’s grip on the industry.
In August, the Department of Energy awarded $500 million to seven companies involved in battery minerals, materials, manufacturing and recycling. This is part of a larger push by the government to secure critical minerals and other materials. It also follows the cancellation of a number of Biden-era policies that supported battery manufacturing and financing for electric vehicles, the world’s largest market for battery technology.
This is the Trump administration’s first round of funding under two $3 billion Department of Energy Battery Technology and Materials programs created through the Biden-era Infrastructure Investment and Jobs Act. Richard Wang, CEO of battery technology company Voya Energy, said strengthening the U.S. battery supply chain was a top priority for the Biden administration.
“Many of these policies were reversed or reversed under the Trump administration,” he said.
The initiative comes as China commands the lion’s share of global market share at several points along the battery supply chain, from raw minerals and chemicals to finished products such as electric vehicles and energy storage systems.
Tu Le, founder and managing director of Sino Auto Insights, said it will take “decades to hundreds of years, if not hundreds of billions of dollars,” to achieve the comprehensive scale across the supply chain that China currently has. “We don’t have decades. We only have five, six, seven years to be competitive.”
China’s advantage in refining
China is a major supplier of several important minerals used in batteries, including graphite. But its real strength lies in refining and processing. The country’s share of mineral refining has increased since 2020, according to the International Energy Agency.
In 2025, China used that position as leverage to impose strict export controls on rare earths and various other minerals and processing equipment.
Several companies receiving DOE funding are targeting spots with a strong Chinese presence. CoreShell Technologies, which was awarded $50 million by the department, manufactures battery anodes, an essential battery component, from domestic silicon rather than Chinese graphite.
Meanwhile, Lilac Solutions received $100 million. The company has a way to extract lithium from salt water, bypassing the common purification process normally required to obtain the material from hard rocks.
Raf Sally, CEO of Lilac Solutions, said the global lithium market will grow from around 150,000 tonnes in 2015 to 1.5 million tonnes in 2025. Much of that growth was due to lithium extracted from hard rock mines in the form of a mineral called spodumene. This rock needs to be processed to extract the lithium, and 95% of spodumene processing is done in China, Salley said.
“With our technology, we produce battery-grade lithium carbonate or lithium hydroxide on the production floor,” Salley said. “And you’re bypassing that critical step, the processing step that China is blocking today.”
China’s dominance continues further down the supply chain. According to the IEA, the company produces about 85% of the world’s positive electrode active material and more than 90% of the negative electrode active material in EV batteries. And it manufactures 80% of the world’s battery cells.
The IEA said this lack of midstream investment in countries such as the United States “increases risks to global supply security.”
Wang said scale is one of China’s biggest advantages, citing CATL, the world’s largest EV and energy storage battery maker based in China, as an example.
“They have built an incredible lead in technology and manufacturing capabilities around the world,” he said. “The company is one of the only battery companies in the world that is not only highly profitable, but also very profitable because its manufacturing and supply chain capabilities are very strong.”
That’s the competition every American company faces.
“There’s a ton of innovation coming out of the United States,” Lee said. “These small startups are very innovative, but it’s one thing to take prototypes of what you’re trying to sell and build them. It’s quite another thing to be able to repeatedly mass-produce them in millions at a high quality level.”
Batteries and EVs
On May 11, 2026, EVs will be ready to be exported overseas through frame transportation in Taicang Port, Suzhou Port, Jiangsu Province, China.
Cost Photo | Null Photo | Getty Images
Batteries have become important for China as the country focuses on expanding EVs domestically and begins increasing exports overseas.
According to the China Passenger Car Association, “new energy vehicles” including hybrids, EVs and long-range EVs accounted for 65% of new car sales in China in July.
There hasn’t been as much interest in the U.S., where EVs, hybrids and plug-ins accounted for about 24% of U.S. sales in the second quarter of 2026, according to the Energy Information Administration. According to Cox Automotive, total new car sales in the U.S. in 2025 were about 16.3 million, compared to 23.7 million in China.
Even though DOE grants have pumped some money into the battery sector, the Trump administration ended federal tax credits for EVs and other funding for those vehicles and batteries.
Nearly $24 billion in announced battery projects have been canceled since President Trump took office in January 2025, according to the think tank Atlas Public Policy.
“If you look at China, China has an incredible lead in EVs at a time when the U.S. is slowing down EV development,” Boya Energy’s Wang said. “What this really puts at stake is the ability of U.S. automakers to compete globally, with China accounting for the majority of global growth.”
Energy storage demand is expanding, growing by an average of 70% from 2022 onwards, according to EIA. According to the IEA, EVs still account for more than 70% of total lithium-ion battery deployment.
Lilac Solutions’ Sally said he believes the U.S. needs to start somewhere, even though China has a big lead.
Over the next decade, the U.S. could see increased domestic production of lithium, cathode materials and battery cells, he said.
“It’s still early days, but it’s a step in the right direction,” he said.
