The Foundation for Defense of Democracies released a report on Jan. 25 finding that China controls more than 80% of critical battery materials used in U.S. defense technology and recommended a strategy to reclaim domestic supply chains.
The report found that China controls 97% of global anode active materials and 85% of graphite processing capacity used in advanced batteries. It also said Beijing has funneled $57 billion from 26 state-backed banks into mining and processing over two decades, a strategy the report characterized as fundamentally parasitic, underscoring the extent of China’s dominance in upstream battery supply chains.
The issue is significant because batteries are increasingly important to both civilian and military technologies. The Foundation for Defense of Democracies said, "Batteries will be one of the bullets of future wars," highlighting concerns about national security vulnerabilities stemming from foreign control over key resources.
Efforts to reduce reliance on foreign suppliers have included investments in domestic manufacturing. Ford’s BlueOval Battery Park Michigan in Marshall uses lithium iron phosphate battery technology licensed from Contemporary Amperex Technology Co. Limited (CATL) and could receive up to $900 million in 45X advanced manufacturing production credits, according to reporting from Bridge Michigan. The state has also approved between $1.7 billion and $1.75 billion in incentives for the facility, reflecting U.S. efforts to onshore parts of the battery manufacturing supply chain.
However, these efforts come with financial challenges. Ford’s Model e division reported a $4.8 billion operating loss for full-year 2025 and recorded a $19.5 billion writedown, including $8.5 billion tied to canceled programs. The company projected additional losses of $4 billion to $4.5 billion and pushed its breakeven target to 2029, according to earnings filings, highlighting the financial pressure on U.S. automakers as they transition into battery-dependent electric vehicle production, as reported by Yahoo Finance.
The Foundation for Defense of Democracies is a nonpartisan research institute focused on national security and foreign policy. Its Center on Economic and Financial Power studies threats to U.S. economic security from state adversaries and has published research on Chinese dominance in battery supply chains, framing critical minerals and battery production as a national security vulnerability.
