China is the largest electric car exporter on the planet. In 2023, it exported approximately 1.7 million electric vehicles, which represents more than 30% of its total car exports. However, its international expansion is being seriously impeded by the tariffs imposed by the US and the European Union, among other regions with significant difficulties in competing with Chinese electric cars.
The success of the country led by Xi Jinping in the electric vehicle industry has strengthened its leadership in the production of lithium batteries . According to reports, 57% of the batteries used in Chinese electric vehicles come from China. Catl and Byd are the largest lithium battery manufacturers in the world, boasting market shares of 34% and 16% respectively in 2023. This Asian country has achieved its dominance due to several critical factors.
First and foremost, it is the largest producer in the world of lithium and rare earths, essential raw materials in battery manufacturing. Additionally, it controls the processing of these materials and is capable of producing large-scale batteries at very competitive prices. Currently, there are no indicators suggesting that its dominance in the lithium battery market will be threatened in the medium term. Nevertheless, the US government is actively working to configure conditions that could potentially end China’s supremacy in the battery sector.
South Korea: The Strongest Alternative to China in Battery Production
At the end of July, LG Energy Solution, the LG subsidiary specializing in lithium battery design and manufacturing, signed an agreement worth $4.3 billion to supply lithium iron phosphate batteries (LFP) to Tesla over the next three years. This plan is backed by the current US administration and seeks to reduce the global dependence of electric car manufacturers on Chinese giants like Catl and Byd.
<img alt="To survive Intel must compete with an unstoppable TSMC. Selling its chips factories now makes more sense than ever" width="375" height="142" src="https://i.blogs.es/bb69d4/intel-ap/375_142.jpeg"/>LG Energy Solution, Sk On, and Samsung SDI are South Korea’s main battery manufacturers.
LG Energy Solution is the largest battery manufacturer outside China. Although it is a South Korean company, it represents the best asset for the US to curb Chinese dominance. Catl and Byd enjoy advantages such as high-performance batteries at very competitive prices, prompting LG Energy Solution , Sk On, and Samsung SDI—South Korea’s main battery manufacturers—to consistently lose market share . According to SNE Research, their combined market share has dropped by 5.4% between January and June 2025.
The Trump administration is committed to reversing this trend, aiming to create conditions in the United States that support South Korean battery manufacturers while penalizing Chinese producers. To achieve this, it has included Chinese battery manufacturers such as Catl, Byd, Envision Energy, Eve Energy, Gotion, and Hithium in a list of prohibited foreign entities. This initiative seeks to prevent US companies from purchasing batteries and components from China, and those that do will be ineligible for state subsidies.
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