Published January 24 2024

Power up or give up? Why increased US battery manufacturing is a critical security need

Has the US sleepwalked into a critical security threat? When it comes to battery production, the truth is an uncomfortable yes. But there is still time to do something about it — if lawmakers act fast.

Between the early 1990s and the late 2010s, lithium-ion battery costs fell substantially. Thirty years ago, typical prices hovered just below $10,000 per kWh. Today, the figure sits just above $100 per kWh. New applications, improved performance, and the increasing awareness of and desire to make a transition to green energy are all driving a huge surge in battery demand.

Between 2022 and 2027, global battery production is set to increase eightfold. In 2022, total capacity stood at 1,163 GWh. Soon it will be 8,945 GWh. By any standards, that is a remarkable spike. And the trajectory is clear: this trend is likely to continue for decades to come. That’s why I’m so confident in calling batteries the defining technology of the 21st century.

But one thing is different compared to the 20th century. America is no longer the world’s manufacturing hub — and this is particularly true in global assessments of battery production. Over the last two decades, others have taken the lead. Now the US is firmly behind the eight ball.

America is not involved in either refining or electrochemical production, both of which are dominated by China. In mining for the raw materials needed to make batteries, the US lags far behind Australia, Chile, and Argentina. It has a larger share of cell production and battery assembly, but in both of these it is still a minor player, with China and Japan the significant forces.

Similar gaps are found in analyses of the global subcomponent capacity share, where China dwarfs the US in cathode, anode, separator, and electrolyte. All of this is a significant economic issue, because America is missing crucial opportunities. But it stretches beyond finances. It is also a major security risk. America is reliant on other countries to provide the critical energy sources it needs. What happens if a diplomatic incident reduces a country’s willingness to trade with the US?

Encouragingly, there are at least signs this is being recognized by US leaders. Battery plant manufacturing capacity is set to increase 424%, from 99 GWh to 519 GWh. More than $100bn has been committed by automakers and their battery partners for US-based EV investments. And the US is set to almost double its share of global production capacity by 2027, rising from 6% in 2022 to 10% five years later.

These are steps in the right direction. But they are not enough. By 2027, China’s battery manufacturing capacity will still be almost SEVEN times larger than the US. And if that doesn’t dramatically tip towards a more even balance, the US is risking everything.

US lawmakers must intervene. As a country, we’ve been asleep at the wheel. We must power up… starting now!

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