China dominates electric car battery production, controlling nearly 85% of the world’s battery cell manufacturing capacity as of 2023. But the picture is shifting fast, with the United States and Europe racing to build domestic production. Here’s where batteries are actually made today and where that’s heading.
China’s Overwhelming Lead
China isn’t just the biggest player in battery manufacturing. It’s the biggest player by a massive margin. The country accounted for 74% of global battery pack and component exports in 2023, and its share of actual cell production capacity is even higher at roughly 85% by monetary value. The two largest battery makers in the world, CATL and BYD, are both Chinese companies.
What makes China’s position so dominant isn’t just the factories assembling battery cells. It’s the entire supply chain feeding into them. Countries like Australia, Chile, and the Democratic Republic of Congo mine the raw materials (lithium, cobalt, nickel), but most of those minerals get shipped elsewhere for processing. China’s share of global cobalt processing jumps from 1% at the mining stage to 80% at the refining stage. For aluminum, its share rises from 21% in mining to 59% in processing. This pattern repeats across nearly every critical battery mineral. Japan and South Korea also operate major refineries, but China processes more mineral commodities at higher volumes than any other country.
This means that even when a battery cell is assembled in the U.S. or Europe, the refined materials inside it very likely passed through China at some point.
The U.S. Battery Belt
The United States has been building out battery manufacturing at an unprecedented pace, concentrated in a corridor running through the South and Midwest that’s earned the nickname “Battery Belt.” Major investments are clustered in Michigan, Tennessee, Georgia, the Carolinas, Kentucky, and Nevada. Michigan alone hosts multiple facilities across Holland, Pontiac, St. Clair, and Brownstown, drawing on the state’s deep automotive workforce. Other production sites stretch from Indianapolis to Jacksonville to Albany, Oregon.
The biggest single facility is Tesla’s Gigafactory in Nevada, a 5.4-million-square-foot complex where Panasonic produces battery cells that Tesla assembles into packs. Tesla is also expanding that site with a $3.6 billion investment to produce its own next-generation 4680 battery cells in-house. Beyond Tesla, LG Energy Solution, Samsung SDI, SK Innovation, and several joint ventures between Asian battery makers and American automakers have announced or opened plants across the Southeast.
Federal policy is a major driver. The Inflation Reduction Act ties EV tax credits directly to where batteries are made. To qualify for the full $7,500 credit on a new electric vehicle, at least 60% of battery component value must be manufactured or assembled in North America through 2025. That threshold rises to 70% in 2026. This has pushed virtually every major automaker to secure North American battery supply, either by building factories or signing deals with suppliers who will.
Europe’s Struggling Buildup
Europe’s battery ambitions have hit serious headwinds. Korean manufacturers, historically the biggest battery suppliers in Europe, saw their EU market share drop from nearly 80% in 2022 to 60% in 2024. Much of that lost ground went to cheaper lithium iron phosphate (LFP) batteries imported from China.
The continent’s most prominent attempt to build a homegrown battery champion, Northvolt in Sweden, ended in bankruptcy. That failure highlighted how difficult it is for new entrants to compete with Asian producers who have years of manufacturing experience and economies of scale. Many other European battery producers have postponed or canceled expansion plans because of uncertainty about profitability. The International Energy Agency describes battery production in Europe as being at a “make-or-break moment.”
Joint ventures may offer a more viable path. Partnerships like the one between automaker Stellantis and China’s CATL could bring LFP battery technology to European factories, potentially narrowing the cost gap with Chinese imports. But for now, Europe remains heavily dependent on batteries made in Asia.
How Tesla Sources Its Batteries
Tesla illustrates how a single automaker can pull batteries from multiple countries depending on the model and market. The company relies on three main suppliers: Panasonic, CATL, and LG Energy Solution, while also producing some cells in-house.
At its Nevada Gigafactory, Panasonic manufactures the cells that go into vehicles sold primarily in North America. At Giga Shanghai, Tesla partners with CATL to produce batteries for the Model 3 and Model Y sold in China and exported to other markets. Tesla’s push to manufacture its own 4680 cells at expanded Nevada facilities represents a longer-term bet on vertical integration, giving the company more control over costs and supply.
This split-sourcing approach is common across the industry. Most major automakers don’t make their own battery cells. They buy them from a handful of large cell manufacturers, then assemble the cells into battery packs at their own facilities or nearby supplier plants.
From Mine to Battery Pack
A finished EV battery touches multiple countries before it reaches a car. The process has three broad stages, and each one tends to happen in a different part of the world.
- Mining: Lithium comes primarily from Australia, Chile, and Argentina. Cobalt is heavily concentrated in the Democratic Republic of Congo. Nickel comes from Indonesia, the Philippines, and Russia. The U.S. has some domestic mining, including a lithium operation at Silver Peak, Nevada, but its output is small relative to global demand.
- Refining: Raw ore gets processed into battery-grade chemicals. China, Japan, and South Korea operate the world’s major refineries by capacity. Most mining countries, including Australia, Brazil, Chile, and the U.S., have limited refining infrastructure and ship raw materials abroad for processing.
- Cell manufacturing and pack assembly: Refined materials are made into battery cells at gigafactories, then grouped into modules and packs. China leads this stage overwhelmingly, with growing capacity in the U.S., South Korea, Japan, and Hungary/Poland (where Korean manufacturers operate European plants).
This fragmented supply chain is exactly what U.S. and European policymakers are trying to consolidate. The goal is to shorten the distance between the mine and the finished battery, reducing dependence on any single country. Progress is real but slow. Building a single gigafactory takes two to four years, and scaling it to full production takes longer still. Developing refining capacity is even harder, requiring specialized expertise that only a few countries currently have at scale.