China Retains Market Advantage in Battery Development Despite US Raising Tariffs on Chinese Battery Imports to 25%
May 23, 2024 | TrendForceEstimated reading time: 1 minute
On May 14, the White House announced significant tariff increases on Chinese EVs and batteries. EV tariffs will jump from 25% to 100%, and battery tariffs will rise from 7.5% to 25%. TrendForce posits that Chinese EVs account for less than 2% of the US EV market, making the actual impact of these tariff hikes minimal. However, the increased battery tariffs are expected to raise EV production costs for US automakers. This could complicate efforts to reduce overall vehicle costs and incentivize consumer purchases.
TrendForce research indicates that Chinese LFP batteries already have a price advantage; the cost of Chinese batteries remains lower than US-manufactured ones—which are more than double in price—even with increased tariffs. Additionally, a recent temporary exemption in the IRA regarding critical minerals from a foreign entity of concern (FEOC) for battery production highlights the US’s continued reliance on Chinese batteries. US automakers still require more time to transition away from Chinese suppliers.
In the short term, increased tariffs and IRA regulations underscore the growing geopolitical influence on the EV industry. US automakers can mitigate these impacts by partnering with established battery makers from Japan and South Korea or investing in solid-state battery technology. In the long term, scaling up EV sales to achieve economies of scale is crucial for reducing battery costs. Traditional US automakers must decide between focusing on fuel vehicles or EVs to avoid resource misallocation. One pertinent example is BYD, which ceased production of fuel vehicles and, within two years, surpassed Tesla in annual sales (combining pure electric and plug-in hybrid vehicles) to become the world’s largest EV producer.
Moreover, the ability to produce LFP batteries domestically is critical for the US. While most US EVs currently use NCM batteries, market reports suggest Tesla has established an LFP battery production line in its Sparks, Nevada factory, with an estimated capacity of 10 GWh—sufficient for approximately 130,000 vehicles with 75 kWh batteries.
LG Energy Solution (LGES) is also setting up an LFP production line in Arizona, which is slated for mass production by 2026. Other companies, including Gotion, American Battery Factory Inc., FREYR Battery, and Our Next Energy, have plans to establish LFP production lines. However, LFP batteries are expected to be primarily used in ESS rather than exclusively in the EV sector.
Testimonial
"We’re proud to call I-Connect007 a trusted partner. Their innovative approach and industry insight made our podcast collaboration a success by connecting us with the right audience and delivering real results."
Julia McCaffrey - NCAB GroupSuggested Items
ION Storage Systems Launches 'Cornerstone,' First Solid-State Battery Samples Shipped to Consumer Electronics
08/19/2025 | PRNewswireION Storage Systems, Inc. (ION), a Maryland-based leader in next-generation solid-state battery technology, announces today that it has begun shipping Cornerstone, the first commercial generation of ION's solid-state battery technology, to leading consumer electronics companies.
Driving the New Era of AI and IoT with Powercast's One-Stop Shop for Wireless Power Solutions
08/18/2025 | PRNewswireAs AI and IoT drive explosive growth, Powercast is redefining how industries power critical infrastructure. By eliminating disposable batteries through long-range RF wireless technology, Powercast delivers cost-efficient, scalable, and sustainable energy solutions tailored to meet the demands of our increasingly connected world.
ION Storage Systems Launches 'Cornerstone'
08/12/2025 | PRNewswireION Storage Systems, Inc. (ION), a Maryland-based leader in next-generation solid-state battery technology, announces today that it has begun shipping Cornerstone, the first commercial generation of ION's solid-state battery technology, to leading consumer electronics companies.
Lyten to Acquire All Remaining Northvolt Assets in Sweden and Germany
08/07/2025 | LytenLyten, the global leader in lithium-sulfur batteries, announced that it has entered into a binding agreement to acquire Northvolt’s remaining assets in Sweden and Germany.
Progress Towards Potassium-ion Batteries
07/07/2025 | ACN NewswirePotassium-ion batteries could have a higher energy density than sodium-ion batteries. This is important for large-scale energy storage such as for renewable energy.