China produces 85% of battery cells and handles 90% of critical raw materials for lithium-ion batteries, putting global electric vehicle makers in a tough spot.
What does this mean?
Lithium-ion batteries, pioneered by Sony back in 1991, are at the heart of everything from smartphones to modern electric vehicles (EVs). But with China leading the pack in both manufacturing and processing, carmakers and policymakers worldwide are sounding the alarm. Firms like Renault, Stellantis, and Toyota are urgently testing out alternatives—from LFP and sodium-ion to cutting-edge solid-state batteries—to lessen their reliance on China and sidestep bottlenecks around materials like cobalt, which is mostly mined in the Democratic Republic of Congo. While innovations like sodium nickel chloride and lithium-sulfur batteries could eventually change the game, most of these options are still years away from mass adoption, leaving automakers largely dependent on China for the foreseeable future.
Why should I care?
For markets: Supply chain shifts are shaping investor priorities.
Battery supply chain risks have become a top concern for automakers and investors, as any hiccup in China could send shockwaves across global tech and auto industries. That’s driving money into companies working on fresh battery chemistries—like Renault with its LNMO batteries and Lyten with lithium-sulfur tech—even though wide-scale rollout of alternatives isn’t expected until 2028 or later. Until then, stocks linked to today’s tried-and-true lithium-ion supply chain will likely keep leading the charge.
The bigger picture: Securing resources drives global innovation.
Electrification makes battery tech a key strategic focus for countries and corporations, with leaders scrambling to reduce reliance on a single country and tackle ethical issues tied to sourcing materials—especially with about 70% of the world’s cobalt coming from the DRC. That’s sparked a wave of investment in new battery chemistries, recycling, and domestic production, as major players like Renault and Toyota push to roll out breakthroughs by decade’s end. The choices made today will influence everything from national security to how affordable and widespread electric vehicles become.