Most EV batteries are made in China. The country accounts for roughly 415 GWh of battery demand in 2023, more than double Europe’s 185 GWh and four times the United States’ approximately 100 GWh. China’s dominance extends far beyond assembling battery packs: it controls nearly every step of the supply chain, from refining raw minerals to manufacturing the electrode materials that go inside each cell.
China’s Dominance Across the Supply Chain
China doesn’t just make the most batteries. It makes the materials that go into almost everyone else’s batteries too. Chinese facilities represent nearly 90% of global manufacturing capacity for cathode active materials (the chemicals that store and release energy on the positive side of a battery cell) and over 97% of capacity for anode materials (the negative side). China also processes over 90% of the world’s graphite, and Chinese companies handle more than two-thirds of global cobalt and lithium processing.
This means that even when a battery is assembled in South Korea, Japan, or the United States, the refined materials inside it very likely passed through Chinese processing plants first. The two largest battery manufacturers in the world, CATL and BYD, are both Chinese. CATL alone held a 36.8% global market share in 2023, producing roughly 260 GWh of batteries. BYD, better known as a carmaker, is also a massive battery producer with over $109 billion in total revenue.
South Korea and Japan
South Korea and Japan are the other major players in battery manufacturing, though their combined share is far smaller than China’s. South Korea holds about 9% of global cathode material manufacturing capacity, and Japan holds around 3%. The key companies from these countries, LG Energy Solution and Samsung SDI from South Korea, and Panasonic from Japan, supply batteries to many of the world’s largest automakers. LG Energy Solution, for example, is a major supplier to General Motors and Hyundai. Panasonic has been Tesla’s primary battery partner for years and operates a large factory in Nevada.
These companies increasingly manufacture batteries outside their home countries. LG, Samsung, SK On, and Panasonic all operate or are building plants in the United States and Europe to be closer to the automakers they supply and to qualify for local incentive programs.
The United States Is Scaling Up Fast
The U.S. had about 100 GWh of battery demand in 2023 and is growing at over 40% year-on-year, the fastest rate among major EV markets alongside Europe. Most of the country’s battery manufacturing expansion is concentrated in a corridor running from Michigan down through Kentucky, Tennessee, Georgia, and Alabama. These states are projected to see the highest growth in battery production capacity through 2030.
Federal policy is a major driver. The Inflation Reduction Act created production tax credits specifically for domestic battery manufacturing: $35 per kilowatt-hour for battery cells and $10 per kWh for battery modules produced and sold in the U.S. Manufacturers also receive a credit worth 10% of their production costs for electrode active materials and critical minerals. These credits are designed to make it financially viable to build battery supply chains on American soil rather than importing finished cells from Asia.
Most of the announced U.S. battery plant projects are scheduled to begin production between 2025 and 2030. Many are joint ventures between American automakers and Asian battery companies. The goal is to move from a position where the U.S. imports nearly all its EV batteries to one where a significant share is produced domestically.
Europe’s Growing Capacity
Europe consumed about 185 GWh of battery capacity in 2023, making it the second-largest market after China, and it matched the U.S. growth rate of over 40% year-on-year. Several countries are building or expanding battery factories, often called gigafactories. Germany, Hungary, Sweden, and Poland have attracted the most investment, driven by proximity to major European automakers like Volkswagen, BMW, and Stellantis. Sweden-based Northvolt became one of the first homegrown European battery manufacturers, though the continent still relies heavily on Asian companies building local plants.
Like the U.S., Europe faces the challenge that even when batteries are assembled locally, the processed materials still come overwhelmingly from China. Building out midstream capacity for refining lithium, cobalt, and graphite is a slower and more capital-intensive process than building assembly plants.
Where the Raw Materials Come From
The minerals that go into EV batteries are mined on nearly every continent, but a few countries dominate. The Democratic Republic of Congo produces 74% of the world’s mined cobalt, a metal used in many battery chemistries to improve energy density and longevity. Indonesia is the second-largest cobalt producer at about 7%, and it’s also a major source of nickel. Lithium comes primarily from Australia, Chile, and China. Graphite, used in virtually all EV battery anodes, is mined mostly in China, Mozambique, and Madagascar.
Mining and processing are two different things, and the gap between them is where China’s supply chain control becomes most apparent. Raw lithium ore might be extracted from an Australian mine, but it’s often shipped to China for refining into battery-grade lithium compounds before being manufactured into electrode materials at a Chinese facility, then assembled into cells that may or may not be shipped abroad for final pack assembly.
What This Means for Battery Costs
The concentration of manufacturing in China has helped drive battery prices down dramatically. The average EV battery pack cost roughly $139 per kilowatt-hour in 2023, down from $1,415 per kWh in 2008. That’s a 90% price drop in 15 years, driven largely by Chinese economies of scale and intense competition among manufacturers like CATL, BYD, and a wave of smaller Chinese companies including EVE Energy, CALB, Gotion High-Tech, and Sunwoda.
As the U.S. and Europe build domestic production, a key question is whether they can achieve similar cost efficiencies or whether locally made batteries will carry a price premium. The tax credits in the Inflation Reduction Act are partly designed to close that gap, effectively subsidizing American-made batteries until production volumes are high enough to compete on cost alone.