China prepares to impose new limits on the export of batteries and electrode materials, a move that could reshape global energy storage markets and impact U.S. and European industries.
China to restrict battery and equipment exports
China is preparing to tighten the flow of critical materials used in energy storage. The Asian giant, which currently dominates the global lithium-ion battery market, is set to introduce major restrictions on the export of batteries and industrial equipment. The Chinese Ministry of Commerce announced this week that new export controls will soon come into effect.
Starting November 8, companies involved in the production of batteries, electrode materials, and related equipment will need to obtain a specific license from the Commerce Department of the State Council before exporting their goods. The government says the measure aims to “safeguard national security and interests.”
China’s dominance in the global battery industry
China’s decision is deeply strategic. The country holds 85% of global lithium-ion cell manufacturing capacity and similar shares in the production of active materials for cathodes and anodes. Such dominance means that any export restriction will inevitably affect the European energy transition and the U.S. clean-tech economy.
China’s control begins at the raw-material stage. The country refines 65% of the world’s lithium, over 85% of its cobalt, and 95% of its graphite used in rechargeable batteries.
This vertically integrated supply chain, built through years of acquisitions, partnerships, and government-driven industrial policy, has enabled faster innovation and cost reductions than those seen in Western markets.
Moreover, fierce domestic competition has shaped China’s battery sector, home to nearly 100 producers, pushing companies to cut margins and lower prices. As a result, Chinese lithium batteries are now 30% cheaper than European ones and 20% cheaper than those made in the U.S., putting Western gigafactories at a clear disadvantage.
A new front in the U.S.-China trade tension?
Beijing’s decision to tighten Chinese battery export rules is the latest sign that it may use supply chains as a tool of economic leverage. While analysts do not expect immediate disruptions, the announcement has already added volatility to international markets.
“The new battery restrictions follow China’s recent export limits on rare-earth elements,” said Stephen Chan, credit analyst at S&P Global Ratings. “Both measures come ahead of a possible meeting between U.S. President Trump and Chinese President Xi Jinping in South Korea later this month. These new export controls are likely to increase market volatility outside China.”
Analysts believe the U.S. will respond by reinforcing alliances across Asia. As highlighted in a recent S&P Global report, “The U.S. will deepen partnerships with Korean and Japanese battery producers to reduce reliance on Chinese batteries and materials, in our view”. However “Potential supply-chain hiccups, such as potential constraints in anode material sourcing, could disrupt production and elevate manufacturing costs in the U.S. over the next six to 12 months”.
The statement underscores the fragile balance between the U.S. strategy to diversify supply chains and China’s firm grip on upstream materials, suggesting that the coming months could bring renewed tension across the battery industry.
What the new Chinese export rules cover
The updated regulations include:
- Cells and battery packs with an energy density of 300 Wh/kg or higher.
- Equipment for manufacturing rechargeable lithium-ion batteries.
- Lithium iron phosphate cathode materials with compacted density ≥ 2.5 g/cm³ and capacity ≥ 156 mAh/g.
- Precursors for ternary cathode materials (nickel, cobalt, and manganese hydroxides).
- Manganese-rich lithium cathode materials.
- Equipment for producing positive electrode materials for rechargeable lithium-ion batteries.
- Graphite anode materials and related production equipment.
- Equipment for granulation, graphitization, and coating processes used in graphite anode manufacturing.
- Processes and technologies for producing graphite anode materials.
