Image generated using ChatGPT. Futuristic battery manufacturing factory in the U.S. with robots using critical minerals and battery cabinets. October 27, 2025.

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In July, a delegation of eight venture capitalists visited CATL’s state-of-the-art manufacturing facility in Ningde, China. What they witnessed was staggering: twelve fully automated battery cell production lines operating in flawless parallel. According to Bloomberg, their collective takeaway was sobering — paraphrased as: “The U.S. effort to compete in battery manufacturing is futile.”

At IQT, we’ve been investing in battery supply chain technologies for well over a decade, and this conclusion is no surprise. China’s dominance in lithium-ion battery production is not accidental — it is the result of decades of deliberate, strategic investment in many of the technologies first established here in the U.S. and scaled by China.

China has invested hundreds of billions in capital for factories and automation, vertically integrated their supply chains by locking up critical minerals and refining, subsidized electricity and land use, provided state-backed financing, and directed minimal regulation. Today, China controls over 90% of the global battery supply chain, from raw material extraction and refining to cell fabrication and equipment manufacturing. China is the 800-pound incumbent in this space — able to operate at minimal margins and absorb overcapacity to suppress competition.

Your high school economics teacher might have called this “comparative advantage,” suggesting we should simply import batteries and focus elsewhere. But this isn’t just about electric vehicles or smartphones. Batteries are now foundational to national security — powering drones, communications systems, directed energy weapons, and critical infrastructure. And just weeks ago, China announced new export controls on lithium-ion battery technologies and manufacturing equipment, effective November 8, 2025. This is not just economic competition; it’s geopolitical leverage and impacts both the U.S.’s economic and national security future.

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The U.S. Is Now the Scrappy Startup — And That’s an Advantage

The U.S. must stop trying to win a race that China has already finished. History favors the agile challenger. Blockbuster didn’t lose because Netflix built more video stores. Amazon didn’t beat Barnes & Noble by out-inventing bookstores. Apple didn’t put RIM out of business by building better mobile keyboards.

These companies changed the game — and forced incumbents to confront the cost of their legacy investments. China’s lead is also its constraint. They are announcing innovations, but largely incremental, designed to preserve existing infrastructure and avoid cannibalizing sunk investments. That’s our opportunity.

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The Next Generation of Battery Manufacturing

Rather than replicating yesterday’s factories and materials, we should focus on building tomorrows. The U.S. must develop a strategic roadmap to leapfrog current technologies and build the battery factories of the future. We need agile, reconfigurable manufacturing platforms that allow for rapid iteration and have an ability to scale with domestic demand — using process tooling and material systems that deliver competitive performance and economic value from the very first pilot, not just at some uncertain point in full-scale production

This means investing in innovation, including:

• Precision automation, inspection, and modular manufacturing tools like rapid inline imaging, plasma processing, dry electrode coating, and battery pack integration;   
• Analytics-driven optimization, materials discovery, design, and modeling; and
• Next-gen chemistries (e.g., silicon-anodes, solid-state, lithium-sulfur, sodium-ion, abuse-tolerant electrolytes…), because the U.S. needs to be producing what the market needs next.

At IQT, we’ve been fortunate to partner with first movers advancing the state-of-the-art in batteries and battery manufacturing, including:

• 6K – versatile modular materials production technology enabling domestic and agile manufacturing with half the footprint;
• Mitra Chem – leveraging data analytics to rapidly move from lab to production in 90% less time; and
• Anthro, Rincell, Sila Nanotechnologies, and South8 – each pushing the boundaries of what’s possible in energy storage supply chains for next-gen chemistries.

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Policy Momentum Is Building — But Must Be Sharpened

The U.S. government has taken meaningful steps to strengthen domestic battery manufacturing. Production tax credits under the OBBA, critical mineral initiatives, reduced regulations and NDAA funding represent very positive momentum. These are foundational moves — and in the near term, expanding capacity for current-generation lithium-ion technologies will be necessary to meet urgent U.S. national and commercial demands.

But long-term competitiveness will not be won by scaling what already exists. It will be won by investing in what comes next with new manufacturing capabilities and reduces the U.S.’s dependency on single source nation states.

To lead, the U.S. must channel a significant share of public capital into the most innovating battery technology platforms and advanced manufacturing infrastructure required to scale them. The U.S. must not only fund innovation — it must de-risk it. This means aligning public capital with private investment, accelerating permitting, and providing low-cost financing for advanced manufacturing infrastructure that next-gen batteries demand.

And to those who are skeptical and view investing in U.S. battery manufacturing as a lost cause, we offer this reminder: history’s most transformative investments often looked futile until they redefined entire industries. These opportunities are where the most extraordinary returns are born.