From Bloomberg, October 11:
The US is heavily reliant on Chinese batteries as it seeks to stabilize the grid and support explosive data center demand for power.
China’s newly announced raft of restrictions on the export of batteries could have major impacts on US companies, analysts say.
Beijing has previously used rare earths as a tool in the trade war with Washington. But with its commanding position in the battery industry, China has identified another point of leverage in trade talks as the US increasingly needs energy storage to support data centers and stabilize the grid.
The restrictions, which take effect Nov. 8, span a wide swath of the battery supply chain. They include large-scale lithium-ion batteries used for energy storage as well as cathode and anode materials and battery manufacturing machinery, all technologies where China has a robust lead.
As with past restrictions, the new rules require battery companies to receive licenses from the Chinese Ministry of Commerce before exporting their goods. That system allows Beijing to selectively weaponize exports.
“While it doesn't impact as wide a range of industries as other Chinese export controls, the dominance of China in battery supply chains means they can squeeze hard and it can be felt pretty quickly by US companies,” said Matthew Hales, an analyst specializing in trade and supply chains at BloombergNEF.
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In the first seven months of 2025, Chinese grid-scale lithium-ion batteries accounted for about 65% of US imports, according to the most recent data available from BNEF. The export curbs would affect these types of batteries, analysts said.
Battery storage is critical for the US as energy demand surges, driven by the artificial intelligence boom. US data centers more than doubled their electricity consumption from 2017 to 2023, according to a report by the Lawrence Berkeley National Laboratory. That figure is expected to as much as triple by 2028, the report notes....***.... While China’s AI boom is constrained by access to advanced chips from the US, ”the energy demand piece is the constraint in the US for AI data center infrastructure,” said Emily Kilcrease, director of the Energy, Economics, and Security Program at the Center for a New American Security.Large-scale batteries help store excess renewable energy and release it when electricity is needed. That can help avert blackouts and bolster grid stability. Practically non-existent a decade ago, US utility-scale battery installation reached a total of 26 gigawatts in 2024. In Texas alone, some 4 gigawatts of battery capacity — enough to supply power for around 3 million homes — went online last year.
As much as 136 gigawatts of new capacity is expected to be added across the country over the next decade, according to BNEF. Much of that supply will need to come from China and can’t be easily replaced by other countries, Hales said.
US battery manufacturing capacity has grown in recent years, but it can’t meet domestic demand for energy storage. Those factories will also be impacted by China’s new restrictions. The Asian nation controls about 96% of the world’s anode production capacity, according to BNEF, and 85% of its cathode capacity.
The inclusion of these key components in Beijing’s measures represents a “huge escalation,” because companies outside China are so reliant on them, said Cory Combs, head of critical minerals and supply chain research at the consultancy Trivium China....
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