Cutting Off the Power: A Strategic Handbook for Reclaiming America's Advanced Battery Supply Chain

List of Key Chapter Titles

1. Introduction
2. The Evolution of Battery Technology
3. Current State: Advanced Battery Chemistries Today
4. Case Study: The Loss and Recovery of U.S. LFP Innovation in China
5. Chokepoints Across the Advanced Battery Supply Chain
6. Upstream: China's Control and Non-Chinese Alternatives
7. Midstream: China's Control and Non-Chinese Alternatives
8. Downstream: China's Control and Non-Chinese Alternatives
9. The Future: Opportunities for Battery Innovation and Disruption
10. China's Non-Market Manipulation Tactics
11. Policy Recommendations
12. Conclusion

Document Overview

This report, published by the Foundation for Defense of Democracies (FDD) in July 2025, aims to reveal the structural dominance established by the People's Republic of China in the global advanced battery supply chain and its strategy to consolidate this position through a series of "non-market" means. The report points out that advanced batteries, as core components for electric vehicles, grid energy storage, consumer electronics, and military systems, have made the security of their supply chain a critical issue for the U.S. economy and national security. Through state-led massive subsidies, vertical integration, price manipulation, export dumping, forced technology transfer, and intellectual property theft, China has systematically distorted the market, establishing near-monopoly control over every stage from mineral extraction and processing to component manufacturing and final assembly, posing a serious risk of "economic coercion" to the United States and free-market nations.

The report systematically outlines the development of battery technology, focusing on analyzing the market landscape and technical characteristics of the three mainstream lithium-based battery chemistries: Lithium Iron Phosphate (LFP), Nickel Manganese Cobalt Oxide (NMC), and Nickel Cobalt Aluminum Oxide (NCA). Using detailed data and charts, the report quantifies China's control over key segments: processing 65% of the world's lithium, over 95% of battery-grade graphite, 85% of anodes, 70% of cathodes, and assembling approximately 77% of global battery packs. Using the case of the bankruptcy of the American company A123 Systems and the acquisition of its LFP technology by China's Wanxiang Group, the report illustrates the different outcomes of competition under market rules versus non-market forces.

The core section of the report provides an in-depth analysis of China's "chokepoints" in the upstream, midstream, and downstream supply chain. Upstream, China controls lithium resources in South America's "Lithium Triangle" and Australia through mining equity acquisitions and offtake agreements, and dominates the global processing capacity for most critical minerals. Midstream, China controls the production of cathodes, anodes, and their active materials, and restricts technology diffusion through export controls. Downstream, Chinese companies hold a major share of the global electric vehicle battery market and circumvent trade barriers by establishing factories overseas (e.g., in the EU). The report also examines potential disruptive technologies such as lithium-sulfur batteries, sodium-ion batteries, and solid-state batteries, as well as the prospects of battery recycling as a path to reduce raw material dependency.

Based on exposing China's "non-market manipulation" tactics—including subsidies, monopolization, vertical integration, price manipulation, dumping, knowledge transfer, and intellectual property theft—the report ultimately proposes a comprehensive set of policy recommendations aimed at "reclaiming" U.S. leadership in the advanced battery supply chain. These recommendations cover six key areas: accelerating domestic critical mineral extraction, breaking China's processing monopoly, promoting battery technology innovation and scaling, stabilizing key raw material prices, utilizing transparency tools to counter non-market behavior, and deepening cooperation with allies and partners ("ally-shoring"). The report emphasizes that the United States and its market-economy allies must take coordinated action to build a resilient supply chain independent of China's coercive economic practices, which is not only a matter of economic competition but also an urgent national security imperative.