U.S. EVs Need Chinese Batteries

In August, Ford and General Motors made a clear choice regarding the future of affordable electric vehicles. In order for the two automakers to be able to use batteries to power their low-cost cars, they turned to a Chinese giant, Contemporary Amperex Technology Co., Limited (CATL). Ford will use the licensing agreement with CATL to manufacture lithium iron phosphate (LFP) batteries domestically. GM will source CATL’s LFP batteries for the Chevy Bolt through 2027 to “stay competitive.”

In a year of setbacks for the U.S. electric vehicle industry, culminating in the loss of the Clean Vehicle Tax Credit, the decisions make economic and technological sense. CATL supplies approximately 40 percent of all electric vehicle batteries worldwide, making it a clear leader. Tesla, Mercedes-Benz, BMW, Volkswagen and Toyota collaborate with them. Ford and GM realize they need to offer low-cost electric vehicle options for the average consumer, so they turned to CATL for LFP batteries, a cheaper alternative to nickel-based lithium-ion cells. Although it was first developed in the United States, American manufacturers no longer produce LFP for electric vehicles, with China and CATL now dominating production.

In August, Ford and General Motors made a clear choice regarding the future of affordable electric vehicles. In order for the two automakers to be able to use batteries to power their low-cost cars, they turned to a Chinese giant, Contemporary Amperex Technology Co., Limited (CATL). Ford will use the licensing agreement with CATL to manufacture lithium iron phosphate (LFP) batteries domestically. GM will source CATL’s LFP batteries for the Chevy Bolt through 2027 to “stay competitive.”

In a year of setbacks for the U.S. electric vehicle industry, culminating in the loss of the Clean Vehicle Tax Credit, the decisions make economic and technological sense. CATL supplies approximately 40 percent of all electric vehicle batteries worldwide, making it a clear leader. Tesla, Mercedes-Benz, BMW, Volkswagen and Toyota collaborate with them. Ford and GM realize they need to offer lower-cost electric vehicle options for the average consumer, so they turned to CATL for LFP batteries, a cheaper alternative to nickel-based lithium-ion cells. Although it was first developed in the United States, American manufacturers no longer produce LFP for electric vehicles, with China and CATL now dominating production.

It is unfortunate that these moves do not fit with the geopolitical vision of American politicians. Then Sin. Marco Rubio was a critic of Ford’s initial partnership with CATL. Michigan Republican Rep. John Moolenaar said GM’s decision was “disappointing…to the American people.” The consensus in Washington is that American companies should not do business with Chinese companies, and policymakers continue to make it more difficult to do so.

But the moves by Ford and GM underscore an obvious fact: If American automakers want to compete against Chinese automakers in the global market, they may need to partner with Chinese battery supply chain companies. The American auto industry faces an existential threat from Chinese automakers. The future of the industry depends on securing the best batteries wherever they come from.

Move to Electric vehicles are not a matter of if, but when. Local headlines hide the fact that sales rose 26 percent globally year-over-year in the first nine months of 2025. Electric vehicles now offer competitive range and superior technology features with costs near parity with gas-powered cars.

The United States must do everything it can to ensure that its automakers can lead, not lag, in this inevitable transformation. They are currently lagging behind. Most Americans — and many representatives in Washington — don’t see Chinese automakers rapidly dominating the world with cheaper, high-quality electric cars.

The United States exported a total of 1.46 million vehicles in 2024. China shipped nearly 1.65 million electric vehicles — led by BYD, the world’s largest electric vehicle maker. Six of the top ten best-selling electric vehicle brands last year were Chinese. Xiaomi, which is described as China’s Apple, will not produce cars until December 2023, but Ford CEO Jim Farley admitted that he does not want to give up on the Xiaomi SU7 after driving it.

Understandably, Americans don’t see how Chinese automakers are reshaping the global landscape. The vehicles are not on American roads and will not be in their neighborhood anytime soon. Tariffs, safety regulations, and upcoming restrictions on connected vehicles make it off-limits for American consumers to even see Chinese cars on their streets. They have to rely on YouTube videos or travel abroad to understand the threat posed by Chinese automakers.

But the CEOs who run the industry recognize the threat. Speaking about electric cars and competition from China, Håkan Samuelsson, CEO of Volvo, warned: “Some companies will adapt to new conditions and survive. Others will not.”

RJ Scaring, CEO of Rivian, said manufacturers need to focus on the fact that “Chinese cars are actually better.” Farley described the Chinese vehicles as an “existential threat.”

The existential threat to Ford and America’s automakers poses an existential threat to countless communities across the country. We have true national champions in the automotive sector like Ford, General Motors, and Tesla. These brands embody what remains of America’s manufacturing power, sustaining jobs and communities throughout the Midwest and South.

Their success is critical to the long-term success of U.S. manufacturing. This industry employs more than 4 million Americans across the country and is vital to the country’s character. As America continues to lose manufacturing jobs, Washington must do everything in its power to keep the auto industry globally competitive.

We do not have national champions in the battery industry. Instead, American automakers that produce electric vehicles domestically rely on Japanese and Korean companies — Panasonic, Samsung, LG Energy, and SK-On. They are exceptional companies that produce advanced technologies and invest in America. The recent raid on the LG/Hyundai plant in Georgia was abhorrent. Japan and South Korea are vital partners whose expertise can strengthen American supply chains, and we must ensure they feel confident investing here.

Washington needs to ensure that Ford and other producers can partner with whoever they believe is best for their long-term success. If this is a Japanese or Korean company, so be it. Farley warned that Ford “is in global competition with China… and if we lose this, we will have no future at Ford.” This global competition with Chinese electric vehicles is what prompted Farley and Ford to partner with CATL.

U.S. policy should aim to build a competitive and dynamic battery industry where supply chain companies compete, and automakers advance.

Allowing automakers and other companies in the battery supply chain to partner with Chinese battery supply chain companies is the best way to support American auto companies, promote domestic manufacturing, and build a supply chain. High political walls only harm our economy.

Because it’s not just CATL. Chinese companies are leaders in production, technology and know-how. No wonder six of the top 10 producers of electric vehicle batteries are Chinese. Despite the call to “leapfrog” or focus on next-generation batteries, Chinese producers are leaders in producing sodium-ion and solid-state batteries as well.

Even with China’s new export licensing requirements for next-generation battery technology, the United States should not close the door on Chinese producers. These restrictions target advanced next-generation chemistry, not the chemistry that powers electric vehicles today or in the near future. For example, modern CATL batteries fall below the energy density limits described in the limitations. Constraints do not hinder the most important partnerships at this time.

Some believe the United States should only support domestic companies trying to break into battery production, including companies with innovative battery chemistry. Although America’s can-do spirit is admirable, we will not be able to match China’s ten-year advantage. Worse still, our automakers could fall behind if we think we can. Growing demand and intense competition in China’s electric vehicle market means it is likely to be CATL, which has more than 20,000 R&D employees, or a rival company, that develops the next innovation.

Bloomberg recently highlighted a trip by eight climate venture capitalists who toured China to see the progress being made in clean technology in China. The trip left one investor saying: “When it comes to battery manufacturing in the West, China’s dominance means the game is now over.” And the recent string of canceled battery factories in the United States proves that. FREYR, KORE Power, AESC and Natron Energy have canceled or halted construction at battery facilities in the United States this year. Gotion, the only Chinese battery producer looking to expand in the United States, will not move forward with its Michigan facility after years of political issues that ended with the state government withdrawing financial support.

Events in Europe over the past month demonstrate the benefits of a different path forward. The battery landscape in the US is more advanced than that in Europe, but on the continent, they have not limited investment in the Chinese battery supply chain. Despite the real challenges they face in building the supply chain, partnering with Chinese companies has proven beneficial.

The result? Well, BMW announced its new iX3 EV to glowing reviews, thanks in large part to a new battery design produced through a partnership with CATL. The car will have a range of up to 500 miles and you will get 200 miles of charging in 10 minutes.

CATL then unveiled long-range, fast-charging batteries for the European market. The batteries will be produced in Europe for European car manufacturers. CATL has invested $12.9 billion in Europe with a factory in Germany and upcoming factories in Hungary and Spain. Now Europe needs to ensure that these partnerships include technology transfer and improving the skills of the local workforce.

It is possible that this production will take place in the United States if Washington allows it. China’s ongoing domestic price war is reducing industry margins and forcing companies to look to invest abroad. Chinese companies want access to the US market and are willing to enter into licensing agreements that allow them to produce here. The United States constantly complains about the negative impact of China’s excess capacity. But this is a golden opportunity to take advantage of to support local manufacturing by welcoming Chinese companies to the country and learning from them.

Instantly In the long term, the Trump administration must ensure that its final regulations for “effective control” of the 45X foreign entities of concern are not too restrictive. The final rule should allow US companies to license Chinese technology and remain eligible for the 45X advanced manufacturing tax credit.

But more importantly, Washington must realize that a tough anti-China stance in the battery supply chain will only ensure Chinese automakers dominate the global market. To use the language of the past few years, we need to “decouple” Chinese battery companies from talking about critical metals or automakers.

If we remain on the current path, we are heading towards a bifurcated car market: a global market, dominated by Chinese brands along with Tesla and the more competitive European and Asian brands; The US market is isolated, dependent on tariffs and protectionism, and falling further behind. This means less production, fewer jobs, and weak American competitiveness.

Washington needs a sense of urgency in confronting this enormous challenge. Policy should ensure that our national heroes are not only protected domestically, but that they are allowed to flourish globally. Continuing to limit partnerships with Chinese companies will not only harm Ford or General Motors, but will weaken U.S. manufacturing and workers and America’s position in the global auto industry. The shift to electric vehicles is inevitable, and whether the United States will emerge stronger will depend on whether Washington gives its automakers the freedom to compete on a truly global stage.