- China dominates battery manufacturing, supply chains and next generation technologies.
- OECD economies urged to coordinate strategy to reduce risk and sustain competition.
- Carnegie Endowment report calls for selective cooperation with Chinese firms.
China has entrenched its position at the centre of the global battery industry, raising concerns across developed economies about supply chain concentration, industrial competitiveness and long term energy security, according to a new report titled ‘Battery Geopolitics: Balancing Industrial Power in the Race to Store Energy,’ by the Carnegie Endowment for International Peace.
Lithium ion batteries now underpin electrified transport, renewable energy systems, data centres, consumer devices and modern defence capabilities. This growing dependence has elevated batteries from a commercial product to a strategic asset, with geopolitical implications tied closely to control over production and raw materials.
The Carnegie Endowment report finds that Chinese firms dominate manufacturing scale, upstream integration and technology development, with this lead expected to widen as companies accelerate efforts to commercialise next generation battery technologies. Notably, China’s battery cell manufacturing capacity could exceed projected global demand by 2030, reinforcing its influence over pricing and supply chains.
This has triggered a policy debate in the United States, Europe, Japan and South Korea over whether to continue investing heavily in domestic battery industries or accept reliance on Chinese supply chains. While some argue that dependence could lower costs and speed up the transition to low carbon energy, others highlight risks linked to export controls, industrial dependency and weakened defence supply chains.
The report outlines a more balanced pathway, focused on cooperation among OECD economies to maintain competition while recognising China’s industrial strength. This includes aligning market access, innovation ecosystems and legacy manufacturing capabilities to support non Chinese players.
At the same time, the Carnegie Endowment recommends selective and strategic cooperation with Chinese companies, particularly in segments where alternative suppliers are limited, as a way to reduce supply chain risks without deepening dependency.
The United States and Europe are expected to play a central role due to their large and growing battery markets. However, much of their current capacity is tied to nickel and cobalt based technologies, raising concerns about long term mineral supply risks and technology lock in. Policymakers are being urged to support new battery chemistries and use market access strategically to diversify supply chains.
Scaling domestic battery industries in Western markets will require a mix of trade measures, local content policies and targeted subsidies. Joint ventures are also seen as essential, particularly to help early stage companies reach commercial scale measured in gigawatt hours, while industrial clusters linked to sectors such as defence could support demand.
South Korea remains a key player with strong manufacturing capability, but risks losing ground in innovation. Greater access to US and European markets, along with collaborative research and joint ventures, could strengthen its position while supporting broader supply chain diversification.
Lithium iron phosphate batteries have emerged as a priority area due to their lower cost, but production remains heavily concentrated in China. While the United States and Europe are expanding cell manufacturing, supply chains for key materials remain underdeveloped.
Sodium ion technology is gaining attention as a potential low cost alternative that could reduce reliance on constrained minerals. However, OECD countries risk falling behind China in this segment despite its compatibility with existing manufacturing infrastructure, underscoring the need for targeted support.
In parallel, Western economies hold a competitive position in emerging technologies such as silicon anodes and lithium metal batteries. Silicon based materials offer near term potential due to their compatibility with current production lines and their ability to improve performance while reducing graphite demand.
The report concludes that coordinated policy, targeted investment and strategic partnerships will be critical to building a more resilient and balanced global battery ecosystem as demand continues to accelerate.
Author: Bryan Groenendaal
