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The global shift toward electrification is driving a race to control the battery supply chain, reshaping economic power in the process. From energy storage systems to electric transport, the ability to scale and secure battery production is becoming a defining factor. It impacts geopolitical influence and supply chain dominance.
Gigafactories are the industrial backbone of the electric age. By producing over 10 gigawatt-hours of batteries annually, they achieve significant cost reductions. This is achieved through scale and integration. This shift has driven battery prices down by nearly 90% in a decade. Such reductions make EVs competitive with traditional cars for the first time.
Although electric vehicle demand is stabilising, consistent market interest means that expanding production capacity remains essential. This is necessary to meet evolving consumer and policy-driven expectations.
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Behind every gigafactory lies a critical component: cathode active materials (CAM) and their precursors (PCAM). These account for roughly 40% of battery costs and dictate performance impacting charging speed, driving range and safety.
Battery chemistry is becoming a key area of competition, as different formulations offer distinct advantages that shape EV performance. These differences influence how manufacturers position themselves globally.
Nickel-manganese-cobalt (NMC) batteries deliver high energy density, making them ideal for long-range vehicles. Lithium iron phosphate (LFP) batteries, on the other hand, are more affordable and stable, gaining popularity for everyday use.
Meanwhile, newer technologies like lithium manganese iron phosphate (LMFP) and sodium-ion batteries are emerging as potential disruptors. They offer alternative pathways that could challenge the current prevalence of NMC and LFP.
The global battery race is shaped by geography, from mineral extraction to refining and manufacturing.
Raw material sourcing for batteries is geographically fragmented. Lithium is primarily extracted in Australia, nickel in Indonesia and cobalt in the Democratic Republic of Congo. China’s cobalt supply has tightened since the announcement of DRC’s export ban. This ban on cobalt intermediates limits refinery feed in the country in the second half of 2025.
The next stages, refining and processing are highly centralised. China handles over 90% of global lithium, cobalt and graphite processing.
China also dominates the production of cathodes and anodes, which are essential components of battery cells. Manufacturing follows a similar pattern, with China currently producing more than three-quarters of the world’s battery cells. It is projected to maintain around 70% of global output through 2027.
South Korean battery producers operated at 50% utilisation rates in H1 2025. LGES reported a drop from 69.4% in 2023 to 51.3% in 2025. This underscores the volatility in gigafactory output and the need for resilient supply chains.
As China continues to dominate the battery supply chain, other regions are actively carving out strategic roles. They aim to rebalance global production.
In North America, efforts are underway to expand PCAM and CAM manufacturing using carbon-neutral processes, supported by substantial government incentives. The region is also investing in refining capacity for critical minerals like nickel and cobalt to reduce reliance on imports.
The US Department of Energy (DOE) announced its intent to issue nearly $1 billion in Notices of Funding Opportunities (NOFOs). This aims to accelerate domestic capabilities in mining, processing and manufacturing of critical minerals and materials.
Europe is building CAM facilities in countries such as Finland and Hungary, aiming to strengthen its domestic capabilities. However, imported materials will still be necessary to meet short-term demand.
India is scaling up production of LFP and other emerging chemistries while simultaneously working to reduce its dependency on foreign suppliers. Meanwhile, Indonesia has shifted its focus from exporting raw nickel to developing domestic refining and CAM production. This positions Indonesia as a key hub in Southeast Asia’s battery ecosystem.
The battery supply chain faces significant challenges that demand strategic solutions. Uneven access to critical minerals such as lithium, nickel, cobalt, and manganese combined with high capital costs continue to limit large-scale production. Additionally, long lead times for building cathode active material (CAM) facilities are a challenge. Furthermore, a shortage of skilled professionals highlights the urgent need for workforce development and integrated industrial planning.
Yet, the sector presents key opportunities to overcome these challenges. Battery recycling can recover up to 95% of critical minerals, strengthening supply security and reducing environmental impact. Emerging regional hubs offer advantages such as access to raw materials, specialized expertise and supportive policies. Innovations in green chemistry further enhance sustainability and provide a competitive edge in environmentally conscious markets.
By 2030, controlling PCAM, CAM, gigafactory output and final assembly will be crucial for advancing electric vehicles and energy storage. Gigafactories are scaling production globally with a growing focus on recycling as a key part of the battery supply chain. The EU mandates that batteries sold in the region must include 6% recycled lithium and nickel and 16% cobalt by 2030. There are higher targets set for 2035.
While recycled lithium and nickel are expected to meet demand, limited cobalt recycling remains a challenge. This issue pushes gigafactories to invest in upstream solutions. Recycling will play a central role in creating a circular supply chain and balancing growth with sustainability.