In 2025 the world’s electric vehicles took on more than 1,000 gigawatt-hours of new battery capacity in a single year for the first time. SNE Research, a South Korean analysis firm, put global EV battery installations at 1,187 GWh, up 31.7% from 901.4 GWh in 2024. Almost two in every five of those gigawatt-hours came from one company, CATL, based in Ningde in Fujian province. Another sixth came from BYD. Add Chinese mid-sized makers such as CALB, Gotion, Eve and Svolt, and the conclusion is plain: the most valuable component of an electric car is now mainly a Chinese product. China makes over 80% of the world’s battery cells and more than 90% of its anode material.
This site has already looked at the industrial clusters behind the industry, at BYD’s rise from phone batteries and at the race to megawatt charging. This article asks a narrower, more numerical question. Exactly what does China control, and what share of it? How did state policy, supply-chain control and an unfashionable chemistry, LFP, build that lead, and where do sodium-ion and solid-state cells fit? And how are other governments responding, through tariffs and FEOC rules, now that Beijing has shown it is willing to put export controls on battery technology itself?
The scoreboard: who makes the world’s EV batteries
Battery market shares depend on what is being counted. SNE Research counts batteries installed in vehicles sold. The International Energy Agency (IEA) mostly measures production across the supply chain. Both methods are legitimate, but they are not interchangeable, and the difference explains many of the apparently conflicting numbers in circulation.
Installations: SNE Research
SNE’s full-year 2025 figures, published in February 2026, give CATL 464.7 GWh, up 35.7%, and a 39.2% global share (38.0% in 2024). BYD was second on 194.8 GWh, or 16.4%, slightly down from 16.9%. LG Energy Solution, the largest non-Chinese maker, came third with 108.8 GWh, and its share fell from 10.9% to 9.2%. They were followed by CALB (5.3%), Gotion (4.5%), SK On and Panasonic (3.7% each), Eve (2.6%), and Samsung SDI and Svolt (2.4% each). CATL and BYD together held 55.6% of the market.
SNE’s January–July 2026 tally puts global installations at 725.2 GWh, up 20.4%. CATL edged up to 39.9%. BYD grew only 4.7%, and its share slipped to 14.7% from 16.9% a year earlier; SNE links this to BYD’s dependence on its own domestic car sales. Rept Battero entered the top ten for the first time. The seven Chinese firms in the top ten now hold 72.8% of the global market, 3.1 points more than a year earlier.
Production: the IEA
The IEA’s Global EV Outlook 2026 shows an even more concentrated industry. In 2025 China made more than 80% of the world’s battery cells, about 85% of its cathode active material and more than 90% of its anode active material. It also built around 70% of the world’s electric cars. The agency’s Energy Technology Perspectives 2026 puts China’s share of lithium-ion supply-chain capacity at about 80%, rising to 97% for anodes. China also processes more than 70% of the world’s lithium, cobalt and graphite. The IEA figures are higher than SNE’s because Chinese materials and cells also end up inside batteries that Korean, Japanese and Western firms supply. China’s lead is no longer confined to its home market either. SNE found that BYD’s installations in Europe tripled in 2025 to 14.9 GWh, and the IEA says Chinese producers’ share of the EU market has almost doubled since 2023.
How the state built a market before it built an industry
China’s battery lead grew out of a car policy. In 2009 Beijing launched “Ten Cities, Thousand Vehicles”, which paid for electric buses, taxis and official cars in pilot cities. National purchase subsidies for private buyers followed. So did an exemption from the 10% vehicle purchase tax. In cities that rationed petrol-car number plates, electric cars were also much easier to register.
The whitelist
From 2015 the industry ministry kept a list of approved battery suppliers, informally known as the whitelist. Only cars using batteries from listed firms qualified for subsidies, and in practice no foreign-owned supplier made the list. This shut LG Chem, Samsung SDI and Panasonic out of subsidised Chinese demand during its fastest growth. By the time the list was scrapped in 2019, CATL was the domestic champion.
What it cost, and the argument about it
The most widely cited estimate of the cost comes from Scott Kennedy of the Center for Strategic and International Studies (CSIS). In June 2024 he put Chinese government support for the EV sector from 2009 to 2023 at $230.9 billion. That total covers buyer rebates, the purchase-tax exemption, charging infrastructure, R&D and government procurement. He calls it conservative, because it leaves out cheap land, credit and power, local government equity stakes, and subsidies to battery and materials makers. CATL’s own reported government subsidies, for example, rose from $76.7 million in 2018 to $809.2 million in 2023.
The figure is contested. China’s State Taxation Administration reported RMB 121.8 billion ($17.2 billion) of purchase-tax exemptions in 2023, against a CSIS estimate of $39.6 billion for that item. On the official figure, CSIS’s total for 2023 would roughly halve. Kennedy also sets out the defence: support as a share of sales fell from more than 40% in the early years to 11.4% in 2023. He himself leans towards the critical view, but he sees the cause as cock-up rather than conspiracy: probably “a byproduct of China’s inefficient industrial policy system in which support typically extends too long and is spread overly widely.”
Central purchase rebates ended in 2022. The tax break is now tapering: for 2026 and 2027 the purchase tax on new-energy vehicles is halved rather than waived, with relief capped at RMB 15,000 per car. By this stage the market barely needs support. According to CAAM, the car manufacturers’ association, China sold 16.49 million new-energy vehicles in 2025, 47.9% of all new vehicle sales, and exported 2.62 million.
The chemistry China bet on: LFP versus NMC
For most of the 2010s, Western and Korean carmakers preferred nickel-rich cathodes, mainly nickel-manganese-cobalt (NMC). These store more energy per kilogram, which means more range. Lithium iron phosphate (LFP) was the poor relation: heavier, weaker in the cold, and mostly used in buses and cheap cars.
Why LFP won
LFP has real advantages. It needs no nickel or cobalt, it is more thermally stable, and it lasts for more charge cycles. CATL and BYD narrowed its energy-density gap through pack engineering. BYD’s 2020 Blade battery uses long, thin cells as structural parts of the pack, and CATL developed its own cell-to-pack designs. Key LFP patents held by a Western-led licensing pool expired around 2022, but by then Chinese firms held most of the know-how and almost all of the capacity.
The IEA says LFP made up more than 55% of EV batteries deployed worldwide in 2025, up from nearly 50% in 2024. In emerging and developing economies outside China it now powers about two-thirds of electric car sales, double its share in 2023. The IEA also highlights an imbalance: outside China, almost 80% of EV batteries were still nickel-based in 2025, and the LFP that was used relied almost entirely on Chinese supply.
The price gap
BloombergNEF’s December 2025 survey found that average lithium-ion pack prices fell 8% to a record $108/kWh. LFP packs averaged $81/kWh against $128/kWh for NMC. China was cheapest at $84/kWh, a 13% fall in real terms, while prices in North America and Europe were 44% and 56% higher respectively. Stationary-storage packs, almost all LFP, dropped 45% to $70/kWh. “Cut-throat competition is making batteries cheaper every year,” said Evelina Stoikou, the report’s lead author. BNEF names the cause directly: China “has consistently produced more cells than are needed for domestic electric vehicle and stationary storage demand”. Materials make the stakes clear. The IEA estimates that cathode material accounts for 40–50% of the cost of an NMC cell and 25–30% of an LFP cell.
Upstream chokepoints: lithium, graphite and the materials in between
Mining is the least concentrated stage of the chain. Australia, Chile and Argentina supply most of the world’s lithium, and the Democratic Republic of Congo about two-thirds of its cobalt. China’s real advantage lies in refining and chemical processing. That is where ore and brine become battery-grade lithium chemicals, graphite becomes anode material, and metals become cathode powders.
Graphite: the tightest link
Anodes are the most extreme case. On IEA figures China has 97% of anode manufacturing capacity and produces about 85% of the world’s natural graphite. Beijing has already shown it will use that position: from December 2023 it required export licences for certain graphite products. That was not a ban, but it was a clear reminder that exports depend on official approval.
Lithium: refining and prices
With lithium, China’s power lies in pricing. Chinese refiners process much of the ore mined in Australia and Africa. Prices soared in the 2021–22 boom and then collapsed as supply caught up. That collapse helped push down battery prices, but it also starved Western lithium projects of finance. BNEF notes that metal prices rose again in 2025, partly because of “supply risks at certain Chinese lithium assets” and new cobalt export quotas in Congo. Pack prices fell anyway, as manufacturers absorbed the increase.
The IEA expects this concentration to persist. Battery capacity grew faster in the EU and US than in China in 2025. Even so, the agency still projects that in 2035 China will supply nearly 90% of anode material, about three-quarters of cathode material and two-thirds of batteries. Western growth is mostly in cell assembly, not in the materials underneath.
Sodium-ion, solid-state and the next chemistries
Sodium-ion: a hedge against lithium
If LFP was China’s first contrarian bet, sodium-ion may be its second. Sodium is abundant and cheap, and sodium-ion cells need no lithium, nickel or cobalt. Their weakness is lower energy density. CATL says it began research in 2016 and has spent nearly RMB 10 billion. Its Naxtra cells reach up to 175 Wh/kg in mass production, not far off entry-level LFP. On 5 February 2026, CATL and Changan unveiled what they called the world’s first mass-production sodium-ion passenger car, a version of the Changan Nevo (Qiyuan) A06, due on sale by mid-2026. CATL claims more than 400 km of range and over 90% capacity retention at –40°C. Gao Huan, CTO of CATL’s China e-car business, said the launch “marks the beginning of a dual-chemistry era.”
These are manufacturer figures, and I could find no independent data on how many sodium-ion A06s have actually reached customers. SNE says CATL plans full-scale sodium-ion production in 2026 and that BYD is reportedly building 30 GWh of annual capacity. That is small next to a lithium-ion market of more than 1,000 GWh. Sodium-ion’s value is strategic: if lithium prices spike again, or if other countries build lithium supply chains that exclude China, Chinese firms will already have an industrial-scale alternative.
Solid-state: agreement on 2027, disagreement on what it means
Solid-state batteries replace the liquid electrolyte with a solid one. They are often described as the technology that could let Japan, Korea or the West leapfrog China. An August 2026 round-up by CarNewsChina found BYD, CATL, Geely, CALB, Gotion and Farasis all targeting trial production or road validation in 2027. Gotion aims for commercial output in 2029–30. China has also issued a national terminology standard that separates liquid, hybrid solid-liquid and all-solid-state cells, which is meant to stop semi-solid cells being marketed as “solid-state”.
The most notable disagreement over timing has come from inside CATL. According to Shanghai Metals Market (SMM), chairman Robin Zeng said in June 2026 that all-solid-state technology was only at about level 4 of 9 on the technology-readiness scale. He also said million-unit deployment before 2030 was very unlikely. A month later CATL told investors that “small-batch production is expected in 2027.” SMM treats these as different yardsticks rather than a contradiction. Its summary of the industry consensus is semi-solid cells in cars in 2026, small batches of all-solid-state cells in 2027, and scale only after 2030. Samsung SDI is working to a similar timetable, so China’s lead here is thinner than in LFP. Where China is clearly ahead is fast charging for mainstream chemistries. CATL’s Shenxing LFP cells and BYD’s megawatt charging let carmakers fit smaller, cheaper LFP packs without buyers minding the shorter range.
Trade walls and tax rules: how the West is responding
Europe: duties, price floors and Chinese factories
After an anti-subsidy investigation, the EU imposed countervailing duties on Chinese-made battery electric cars in late 2024. Rates are set per company, from 7.8% for Tesla to 35.3% for SAIC, on top of the standard 10% car tariff. The duties cover cars, not cells. In February 2026 the Commission accepted its first minimum-price undertaking, from Volkswagen (Anhui) for the Cupra Tavascan. That car is now exempt from the duty as long as it is sold above a confidential floor price, within a volume quota, and with committed investment in the EU.
Europe also welcomes Chinese battery plants. CATL already makes cells in Erfurt, Germany. On 22 September 2026 it started trial cell production at Debrecen, Hungary, a plant planned at 100 GWh that will become its largest outside China. That is later than the late-2025 or early-2026 start Reuters had reported. CATL and Stellantis are investing up to €4.1 billion in an LFP plant near Zaragoza, Spain, but some reports now describe its timetable as uncertain.
The United States: exclusion, with a licensing loophole
Washington has gone much further. Section 301 tariffs on Chinese EVs rose to 100% in 2024 and on EV lithium-ion batteries to 25%. A 25% duty on non-EV lithium-ion batteries followed on 1 January 2026. The One Big Beautiful Bill Act ended the consumer EV tax credit for vehicles bought after 30 September 2025. It also tightened the “prohibited foreign entity” rules on the manufacturing credits that remain. Under interim Treasury guidance, battery components claiming the 45X production credit need at least 60% of material costs from non-prohibited sources in 2026, rising to 65% in 2027 and 85% from 2030. The IEA warns that these rules could also hurt Korean and Japanese producers in the US that rely on Chinese materials.
The clearest sign that Detroit still needs Chinese know-how is Ford’s BlueOval Battery Park in Marshall, Michigan. The plant is wholly Ford-owned but uses LFP technology licensed from CATL. In June 2026 Ford said workers were building complete cells “from slurry to coating and formation, all the way through aging and final inspection”. It expects to be “the first to deliver lithium-iron phosphate (LFP) batteries in the U.S. for mainstream consumer automotive use”. Whether licensing deals like this qualify for credits depends on their terms, such as control rights and royalties. The technology crosses the Pacific while the equity stays at home.
Beijing’s counter-move: export controls on battery know-how
China now treats battery technology as a strategic asset as well as a product. On 15 July 2025 the commerce and science ministries added “battery cathode material preparation technology” to the catalogue of technologies restricted for export. It covers high-performance LFP, lithium manganese iron phosphate and phosphate precursors. The same notice added lithium extraction and refining technologies. These are licensing requirements, not bans. A ministry spokesperson said such technologies were “increasingly used in sensitive fields”.
On 9 October 2025 Announcement No. 58 went further. It put lithium-ion cells and packs of 300 Wh/kg and above, high-performance LFP cathode material, artificial graphite anode materials, and related equipment and technology on the dual-use export control list from 8 November. The law firm Herbert Smith Freehills Kramer called it the first time batteries had been placed under China’s dual-use controls. After US–China talks in Kuala Lumpur, Announcement No. 70 of 7 November 2025 suspended the measure, along with several rare-earth controls, until 10 November 2026.
That deadline is about six weeks away. Unless the suspension is extended, the controls could return. Even while suspended, they have changed the calculation for projects such as Marshall and Zaragoza, which depend on Chinese know-how continuing to flow. Beijing has now written the legal tools to slow that flow when it chooses, much as it has done with rare-earth magnets.
Recycling, overcapacity and competition at home
A recycling boom with too little scrap
China’s first large generation of EV batteries is now retiring. Interim measures issued on 31 December 2025 by six ministries, led by the Ministry of Industry and Information Technology (MIIT), took effect on 1 April 2026. They give every battery a digital identity on a national tracking platform and make carmakers and battery makers responsible for recycling. Vehicles are, in principle, to be scrapped together with their batteries.
Estimates of the volumes vary. An MIIT official told a September 2026 industry conference that more than 400,000 tonnes of used batteries were processed in 2025 and that about 1 million tonnes a year would be generated by 2030. CATARC Automotive Data, writing with Greenpeace East Asia, estimated that only 377,000 tonnes were generated in 2025, against nearly 3 million tonnes of annual recycling capacity. Average plant utilisation was about 30%, far below the 60–70% needed to break even. Recycling LFP is especially marginal because its value depends almost entirely on the lithium price.
Europe is writing its own rules. Under the EU Battery Regulation, EV batteries need a digital passport from 18 February 2027. From August 2031 new batteries must contain at least 16% recycled cobalt, 6% lithium and 6% nickel. China’s national tracing system gives its firms a head start in the documentation these rules will demand.
The “de-CATLization” row
Dominance abroad has not brought harmony at home. By mid-September 2026, CATL’s Shenzhen-listed shares had fallen about 35% from their May peak. Li Auto has moved to in-house cell designs built with Sunwoda, and Xiaomi has added CALB and Sunwoda as suppliers. On 22 September an MIIT-affiliated outlet criticised the “de-CATLization” narrative, saying, in CnEVPost’s translation, that “‘Diversification’ is not the same as ‘removing industry leaders'”. It also warned that low-price competition was spreading upstream. CATL still had 41.45% of Chinese installations in August, according to the China Automotive Battery Innovation Alliance.
Conclusion: what it means for everyone else
The sources count differently, but they tell a consistent story. China makes roughly four in five of the world’s battery cells, almost all of its anode material and most of its cathodes. Two Chinese companies install more than half of global EV battery capacity, and Chinese firms together install nearly three-quarters. The chemistry the market is moving to, LFP, is one China built almost alone. The emerging alternative, sodium-ion, is being commercialised first by the same firms.
This position was built by a long, costly and sometimes wasteful state effort. CSIS’s $230.9 billion estimate is contested in its details, but few dispute that the support was large or that it worked. Fierce competition among firms, and a willingness to back an unfashionable chemistry, did the rest.
For other countries the trade-offs are awkward. Cheap Chinese batteries are the main reason EVs and grid storage are becoming affordable, and BNEF expects prices to fall again in 2026. Yet the IEA projects that China will still dominate battery materials in 2035, and Beijing’s 2025 announcements show that access to the underlying technology can be switched off. Europe is combining tariffs with Chinese investment, the United States is betting on exclusion softened by licensing, and emerging economies are simply buying Chinese LFP. Three signposts will show which approach works: whether the dual-use controls return after 10 November 2026, whether Debrecen and Marshall reach volume production, and whether solid-state cells arrive in 2027 or slip towards 2030.
