Chinese battery suppliers hold 90% of US storage market, sparking concern

Chinese suppliers now control 90% of the U.S. energy-storage market, a concentration that Washington views as a vulnerability for the country's renewable energy expansion.

Chinese companies supply nine out of every 10 battery storage systems deployed in the United States, according to industry data cited in a July 19 report. The dominance spans grid-scale lithium-ion batteries used to store solar and wind power, creating what policymakers describe as an overreliance on a geopolitical rival for critical energy infrastructure.

"China's dominance in battery storage supply chains poses a national security risk if trade tensions escalate or supply is disrupted," said a senior U.S. energy official familiar with the matter, speaking on condition of anonymity. The official added that the administration is reviewing options to reduce dependency, including expanded domestic manufacturing incentives and import restrictions.

The 90% market share figure covers the full value chain — from battery cells and modules to complete energy storage systems — with Chinese manufacturers including Contemporary Amperex Technology Co. Ltd. (CATL) and BYD Co. leading global production. CATL alone controls roughly 37% of the global EV battery market, according to SNE Research data, while BYD holds about 16%. Both companies have expanded aggressively into stationary storage, the segment that directly supports U.S. solar and wind farms.

Tesla Inc., the largest U.S.-based battery manufacturer, has taken steps to reduce its own exposure to Chinese supply chains. In August 2025, Tesla struck a $4.3 billion deal with South Korea's LG Energy Solution to supply batteries for its Megapack energy storage products, a move analysts said was designed to diversify away from CATL-sourced cells. Tesla's Megapack factory in Lathrop, California, has an annual capacity of 40 gigawatt-hours, but the company still relies on Chinese suppliers for a significant portion of its cell needs.

The concentration risk extends beyond batteries themselves. China also dominates the processing of critical minerals used in lithium-ion batteries, including lithium, cobalt, and graphite. Beijing controls roughly 60% of global lithium refining capacity and over 70% of graphite production, according to Benchmark Mineral Intelligence data. Any disruption to Chinese exports of these materials would ripple through the entire U.S. energy storage supply chain.

The Inflation Reduction Act of 2022 includes provisions to incentivize domestic battery manufacturing, offering a $35 per kilowatt-hour tax credit for cells produced in the U.S. and a $10 per kWh credit for battery modules. The policy has spurred investments from companies including LG Energy Solution, which is building a $5.5 billion battery complex in Arizona, and Panasonic Holdings Corp., which operates a $4 billion plant in Kansas. However, domestic cell production capacity remains a fraction of what would be needed to replace Chinese imports.

For investors, the dynamic creates a clear divergence. U.S.-based battery manufacturers and their suppliers — including Tesla, LG Energy Solution's U.S. operations, and critical mineral processors like Albemarle Corp. — stand to benefit from any policy shift that restricts Chinese imports or accelerates domestic production. Conversely, Chinese battery suppliers face regulatory headwinds in the U.S. market that could compress margins and limit growth in the world's second-largest energy storage market. The U.S. energy storage market is projected to grow to $25 billion annually by 2030, according to BloombergNEF, making the stakes for supply chain control substantial.

This article is for informational purposes only and does not constitute investment advice.