Lithium-ion batteries are technologically complex products essential to a high-tech and low-carbon economy. In the race to incubate battery industries, governments have deployed a myriad of tools at varying pace and scale—with mixed results. The past decade of neo-industrial policy, from which batteries have been a top recipient of investment, sheds light on best practices and important lessons for present and future industrial strategy, for the battery sector and beyond. Some countries have chosen to build their own national champions while others have prioritized joint ventures. Some have lost their standing in battery production while others have fought ardently to secure new markets. In some instances, innovation policy has directly driven the development of breakthrough technology that is now on the commercial horizon, while in others it has been misguided.

This compendium offers a detailed political-economy analysis of how the seven most important battery-producing countries have sought to scale this key industry of the future. It provides a deep dive into the policy ecosystems of China, South Korea, Japan, the European Union (including some of its member states), the United States, Canada, and India. In doing so, it offers essential lessons about how and where battery policies have produced lasting results. The compendium is the second in a series of reports produced in conjunction with the New Energy Industrial Strategy Center that provides a holistic view of the geopolitics of key energy technologies and their innovation pathways. The first report, Battery Geopolitics: Balancing Industrial Power in the Race to Store Energy, offered an in-depth look at battery technology and its future trajectory.¹ This one looks at seven country cases through a complementary political-economy lens and uses Carnegie’s global database on battery firms from the first report to identify country-level commercial progress.

There is no more important place to begin than with China, the world’s largest battery producer, consumer, and innovator. While it is difficult to provide a perfect comparison of its economy with market ones, the success of Beijing’s policy regime still offers essential industrial policy lessons. South Korea and Japan offer compelling case studies as these two former battery-technology leaders took different paths, with the former’s aggressive shift toward securing market access abroad and the latter’s muddled technology policy causing its firms to fall behind. The European Union and the United States might be viewed in a similar light due to their large market size and lack of incumbent battery champions. However, the U.S. battery ecosystem might prove more successful thanks to an aggressive subsidy regime, innovation ecosystem, and openness to joint ventures, while the EU’s demand-side and regulatory approach yielded mixed results. Canada and India can be viewed as horizon markets to watch, where onshoring has proved more challenging.

With its battery policy, market, and technology landscape, China is the dominant force in global battery geopolitics, and this is unlikely to change in the near term. Over two decades of industrial policy, it has constructed the world’s most vertically integrated battery ecosystem, with overwhelming shares of cell production, active materials, and, increasingly, next-generation chemistry commercialization. The 15th Five-Year Plan for 2026–2030 will further increase state support, with the political priority shifted toward solid-state batteries while lithium iron phosphate (LFP) battery production enters a more market-driven phase. Anti-involution rhetoric has begun to lead to the trimming of low-end overcapacity, but it will not drive policy actions that change China’s central role in global battery production. On the international front, a new era of export controls on high-tech manufacturing equipment and high-energy-density batteries signals that Beijing is tightening its control on advanced battery technology leaving the country, which constrains the overseas ambitions of Chinese battery manufacturers and limits the access of OECD countries to China’s most capable products. The result is the entrenchment of China’s hyper-dominance in incumbent chemistries, as it is already moving faster to claim advanced technology like sodium-ion and solid-state.

Institutional Mapping

The most important documents for setting strategic policy direction come from the State Council, reflecting priorities supported by the leadership of the Chinese Communist Party. State Council policy support for the battery and new energy vehicles (NEV) sectors has been consistent since the late 2000s. The cycle of Five-Year Plans (FYPs) is also essential to the policy ecosystem, and the battery sector has been supported since the 12th FYP (2011–2015). The National Development and Reform Commission is the most important ministry for implementation. It implements high-level political priorities and coordinates (and sometimes adjudicates) between different ministries involved in a specific policy area. This dynamic is true for provincial and local governments as well as for the central government; their own Development and Reform Commissions (DRCs) are the most important agencies for local policy implementation. Given the importance of local-government support for industrial policy implementation, these DRCs are important power brokers.

Policy Background

The 2010s were a crucial early-growth period for China’s battery ecosystem, which was driven principally by policy incentives for NEV uptake. During this phase in particular, the maturation of the ecosystem was primarily tied to policy support for NEVs as a new growth industry and a way to address pollution issues and to long-term vulnerabilities on imported fuels. The signature government policy for NEV deployment came in 2009 with the Ten Cities, Thousand Vehicles pilot program to identify specific cities to pioneer incentives for NEV development.² After an initial rollout in thirteen cities in 2010, it was quickly expanded to almost 100 cities by 2015 to drive NEV deployment.³ This policy encouraged the deployment of the desired technology while also giving participating local governments a demand driver to encourage local manufacturers to enter this space. During this period, policy documents related to NEVs began making more references to innovation and contained a growing focus on battery improvements for NEV development.⁴

Consumer incentives in this period were paired with other strategic industrial policy priorities. One was ratcheting requirements for battery performance tied to NEV credit eligibility, particularly in terms of range and energy density.⁵ A second defining element of this phase of battery-related industrial policy began in 2015, when the Ministry of Industry and Information Technology (MIIT) established a new “white list” system for battery suppliers, with only NEVs using batteries from white-listed battery manufacturers eligible for purchase incentives.⁶

Among the initial criteria set by the MIIT were scale (minimum annual output levels) and investment in innovation (R&D staff) as well as technical considerations. Only Chinese battery manufacturers were included on the white list. The intention behind these criteria was twofold: to limit the number of low-end domestic NEV battery providers and to protect domestic battery providers from South Korean and Japanese competition. The results of this system for the largest Chinese battery manufacturers, CATL and BYD, were positive, with their market shares growing until the suspension of the policy in 2019.⁷ But some industry actors at the time felt that the policy had limited the innovative impulse of Chinese battery manufacturers by protecting them from outside competition and restricting their access to external technology.⁸

With the repeal of the MIIT white list policy in 2019, China’s policy ecosystem signaled that battery manufacturers no longer needed such a level of protection from outside competition. This period also saw increasing complaints in the ecosystem about overcapacity.⁹ These dynamics coincided with the rapid approval for and construction of Tesla’s Gigafactory Shanghai in 2018–2019, which was intended as a “catfish” project to spur more ambition and innovation from domestic NEV/battery producers.¹⁰ By 2020, most direct consumer subsidies for EVs were also being phased out.

Batteries rose to a new level of political prominence during the 14th FYP period (2021–2025). Several drivers coalesced to make this a more important period for battery development than the 2010s.

First, President Xi Jinping’s pledge in 2020 that China would reach peak carbon emissions by 2030 and net-zero emissions by 2060 cemented his personal political association with new energy industries. This political blessing for renewable technologies was transmitted quickly throughout the bureaucracy, with local governments racing to expand support for new energy-manufacturing facilities in the early 2020s.¹¹ The 14th FYP, published in 2021, provided additional clarity that clean-technology sectors were prioritized strategic sectors for the central government.

Second, the economic growth benefits of green industries, including batteries, became particularly valuable given the macroeconomic headwinds faced by China after it ended its Zero COVID policy in late 2022. This was especially the case in 2023, when many local governments increased incentives to build up clean-energy manufacturing capacity after a tepid recovery in overall consumption despite pandemic measures being lifted.¹² Macroeconomic headwinds also contributed to the spread of trade-in policies to promote NEV purchases in 2024, which were renewed for 2025.¹³ The scale of NEV demand growth, with penetration rates rising from around 5 percent in 2020 to over 50 percent of passenger vehicle sales in 2025, produced a demand boom for the domestic battery industry.¹⁴

Third, this period saw the emergence of battery energy storage systems (BESS) as an important demand driver for batteries. This was a change from the 2010s, when battery-related planning was framed primarily around NEVs. A renewed government interest in power-market reform was instrumental for this, as was overall renewable deployments reaching a level far higher than in 2010–2020.¹⁵ Until 2025, many provincial and local governments still had mandatory BESS installment requirements for new solar and wind projects.¹⁶

These incentives drew industry criticism for encouraging low-cost and low-quality batteries, but they provided a tailwind for battery demand. In January 2026, officials from the National Energy Agency (NEA) reflected on the progress in battery storage during the 14th FYP as having achieved “leapfrog development,” expanding installed capacity by more than forty times compared to the end of the 13th FYP (2016–2020).¹⁷ Domestic overcapacity was still a headache for battery manufacturers in this period, as in the late 2010s, but the government’s intention to support battery development as a resilient strategic priority became unambiguous.

Innovation Policy

The 14th FYP placed a high priority on innovation, with batteries selected for innovation and public R&D spending. Soon after its publication in 2021, key innovation-related actors like the Ministry of Science and Technology and the NEA publicly confirmed the priority of decarbonization technologies, including batteries, in this context.¹⁸ China’s regional clusters for local supply-chain integration and innovation kicked into high gear during this period.¹⁹ Concerns about involution, low-value-added manufacturing, and sustained economic headwinds led provincial and local governments to increase incentives for advanced battery projects, particularly in the second half of this period. Beyond the 14th FYP’s general focus on innovation, the emergence of “new productive forces” as a political priority in late 2023 and early 2024 deepened this imperative, particularly given the lack of other promising sectors as growth drivers.²⁰ Political rhetoric on combating involution also brought a focus in late 2024 and 2025 on reducing low-value manufacturing capacity and prioritizing higher-value technologies.²¹ For sodium-ion development in particular, market tailwinds from high lithium carbonate prices increased commercial and policy interest in 2021–2023, but overall policy enthusiasm was tepid compared to that for LFP.²²

Solid-state batteries also benefitted from policy support, but primarily toward the end of the 14th FYP. In January 2024, a new platform for industry and academic collaboration on solid-state batteries was launched with participation from the MIIT, the Ministry of Science and Technology, and officials from the State-owned Assets Supervision and Administration Commission of the State. Executives from most large Chinese battery manufacturers were present at its launch.²³ Later in 2024, the MIIT launched an RMB 6 billion ($836,000) fund for solid-state R&D, a sum that was awarded principally to the six largest battery firms.²⁴ Although policy action emerged more frequently toward the end of the 14th FYP, there is room for the government to outline a more comprehensive strategy for solid-state development, perhaps as part of the 15th FYP.²⁵ Regulation to clarify standards on solid-state and semi-solid-state batteries were first published at the end of 2025.²⁶

Foreign Policy

Most of the 2020–2025 period saw growing confidence in domestic manufacturers and openness on the part of battery manufacturers to engage internationally. Compared to the earlier period of anxiety about competing with Japanese and South Korean battery manufacturers, this one saw few formal restrictions in the domestic market against non-Chinese manufacturers. Until late 2024, this period was also one of international expansion for battery manufacturers. The impulse to go abroad intensified in 2023 when signs of domestic overcapacity increased again, but it was largely confined to the largest battery manufacturers.²⁷ Outbound investments were primarily focused on Europe, Southeast Asia, and the United States. In pursuing overseas projects, some manufacturers have included joint ventures and licensing deals—notably CATL’s technology licensing deal with Ford in the United States.²⁸ Despite these efforts, battery manufacturers have had a more difficult time than their solar energy peers in going abroad, particularly related to issues like local environmental regulations and related supply chains for battery manufacturing. 

This environment began to change in late 2024 as a result of growing geopolitical tensions. In January 2025, the Ministry of Commerce (MOFCOM) and the MIIT proposed new restrictions on LFP-manufacturing technologies, which were finalized in July.²⁹ In October, the MOFCOM proposed additional restrictions on exports of LFP materials as well as on the export of batteries with an energy density higher than 300 Wh/kg.³⁰ These restrictions were then put on hold as part of trade negotiations with the United States, but the signal to the domestic industry was that advanced batteries are a strategic technology that will be impacted by geopolitical competition.

This is a double-edged sword for China’s battery ecosystem. On one hand, this signal will make support from central and local government for advanced batteries as a sensitive industry even more robust during the 15th FYP. On the other hand, it will make the overseas expansion hopes of battery manufacturers much more complex to achieve. It will also bring new headwinds for the ability of non-Chinese partners to access the most advanced Chinese battery technology. A 2026 State Council decree established a stricter system for reviewing all forms of outbound investment, particularly related to sensitive technologies.³¹ This is a significant formalization of China’s ability to restrict the overseas diffusion of its leading battery technologies. More headwind will be created by Beijing’s posture on retaliating against “discriminatory” policies faced by Chinese firms overseas, including related to mandated technology transfer, something displayed most clearly by another 2026 State Council decree on supply-chain security.³²

Domestic Market and Innovation

China’s battery ecosystem is the world’s largest, with capacity larger than current global demand. Data from 2025 indicate that the country’s operational cell production capacity already exceeds 2,000 GWh, with potentially as much as 5,000 GWh coming online by 2030.³³ Despite rapid growth in the BESS industry, NEVs remain the primary driver of battery demand, accounting for almost 80 percent of demand in 2025.³⁴ The majority of battery production remains in LFP, particularly for NEV batteries, for which LFP has almost an 80 percent market share.³⁵ The battery market is still dominated by CATL and BYD, which in 2025 together accounted for 65 percent of domestic production.³⁶ LG is the only foreign manufacturer with a notable share of battery production in China—but only in nickel-cobalt-manganese batteries, which represent less than 20 percent of the market.³⁷

China’s global role in anode active materials (AAM) and cathode active materials (CAM) production is even more central than in downstream LFP production. The International Energy Agency in 2024 estimated that the country had 97 percent of global AAM capacity and 90 percent of global CAM capacity.³⁸ After swings in the price of lithium in 2021 and 2022, China’s efforts for domestic lithium production increased significantly, helping address global fears of prices remaining high but creating new headaches for non-Chinese producers.³⁹ Although China’s has long had a dominant role in minerals processing, policy emphasis on domestic mining output has grown as geopolitical conditions have deteriorated, particularly after a State Council meeting on rare earths production in 2023.⁴⁰ Despite the country dominating battery supply chains, policymakers are still uncomfortable with the upstream import dependencies of LFP production.

Though they occupy a commanding position in LFP supply chains, Chinese incumbents and startups are active across the next-generation battery chemistries covered by the Carnegie facility-level data.⁴¹ For sodium-ion development, the pipeline for near-term capacity growth is clear. Carnegie analysis identified fifteen sodium-ion facilities at or near commercial scale in China, with a combined planned commercial production capacity of almost 100 GWh. This pipeline includes large battery incumbents as well as newer entrants. As of January 2026, CATL had launched its Naxtra II sodium-ion battery for light commercial uses and was testing sodium-ion batteries for passenger vehicles.⁴² BYD’s planned facility in Qinghai province is the largest identified by Carnegie analysis, but other facilities for sodium-ion production larger than 10 GWh include Great Power, Tianneng, and Zhong Na.

For lithium-metal batteries, Carnegie analysis identified three facilities already reaching commercial operations and nine planned to enter commercial operations by 2028 (thanks in large part to twelve facilities having started pilot production by 2026). These include fully solid-state and semi-solid-state facilities. Five facilities are targeting production of batteries with energy densities of at least 400 Wh/kg, above the export-control threshold proposed by the MOFCOM in 2025. For silicon-anode batteries, Carnegie analysis found seven facilities that were due to reach commercialization by 2026. Although sodium-ion development enjoys domestic support linked to advantages like high performance in cold temperatures and safety performance, it does not receive the same level of overall policy enthusiasm as solid-state batteries. Solid-state batteries will likely receive additional central and local government support during the 15th FYP.

Battery Hub Development

Based on data provided by Rhodium Group, more than 350 facilities have been identified in China producing electrode active materials (EAM) or battery cells.⁴³ In terms of number of facilities, the coastal export hubs are still most consequential. Jiangsu, Guangdong, Fujian, and Zhejiang account for almost 50 percent of cell and module facilities. These four coastal provinces have the strongest history of battery development and exports, and they are home to many of the largest battery manufacturers. For EAM, their share is under 30 percent. Northern and western provinces have so far captured a smaller share of battery facilities, compared to other new energy sectors like solar. Provinces like Inner Mongolia, Ningxia, and Qinghai have a relatively small number of facilities. Some of the non-coastal provinces that have secured a larger share of facilities include Sichuan and Anhui. In terms of next-generation facilities identified by Carnegie, Jiangsu ranks highest, closely followed by Jiangxi, Anhui, and Shandong. Jiangxi and Shandong are notable in this context for their smaller share of current-generation facilities.

Jiangsu Province

Jiangsu has a history of supply-chain development and innovation policies for new energy industries. Its history of industrial-park formation for new energy sectors began with solar (particularly in cities like Changzhou and Wuxi), and today its ecosystems have extended to battery supply chains. The city of Changzhou in particular is a strong presence in Jiangsu’s battery supply chain, covering most of its elements.⁴⁴ Jiangsu’s role as a hub for NEV development and research has also been key in the development of its battery industry.⁴⁵ Local governments in Jiangsu are active in next-generation battery development, with the provincial DRC having identified solid-state batteries as a priority for Jiangsu’s energy-storage industry.⁴⁶ Liyang county in Jiangsu, for example, has provided grants for enterprises to pursue R&D and innovation work related to solid-state batteries.⁴⁷

Anhui Province

Anhui’s role in battery supply chains is closely linked to its historic strength in the automotive industry. In 2023, the provincial government passed new regulations encouraging NEV manufacturing clusters, including with an eye to solid-state batteries.⁴⁸ This push to upgrade the local battery supply chain included explicit support for “chain-leading” companies. Gotion High Tech, based in the city of Hefei, is the anchor of Anhui’s battery ecosystem, with aggressive efforts in solid-state development and supportive supply chains located in the province.⁴⁹ In June 2026, Anhui launched a Solid-State Battery Industry Alliance, covering NEV makers and battery manufacturers.⁵⁰

Outlook and Signposts

China’s dominance in LFP battery production shows few signs of weakening. The country is already pushing ahead across next-generation chemistries. In terms of outlook and signposts, these two segments must be evaluated separately. For LFP, central-government efforts on anti-involutionary competition may reduce some domestic overcapacity, and demand will be increasingly market-driven rather than policy-dependent. For next-generation technologies, there are no such concerns about anti-involutionary competition, and policy signals suggest that the central government will make next-generation batteries a more politically prized segment during the 15th FYP period. Commercialization pathways for sodium-ion batteries are already apparent, but overall policy support is likely to prioritize solid-state projects over sodium-ion ones during the 15th FYP.

In terms of demand, LFP is entering a period in which market dynamics will be driven less by policy incentives and more by market growth. Purchase incentives for NEVs will be lower in the 15th FYP period than they were in the last ten years of NEV growth. Batteries for stationary storage uses will see more growth (and benefit from policy support like the new capacity payment mechanism announced in January 2026), but they will need to find an economically viable place in Chinese power markets without guaranteed offtake from grid companies. There will be stronger demand-side support for next-generation batteries during the 15th FYP period, and it is possible that in some cases this may come at the expense of LFP batteries. Policy signals make clear that China is unlikely to rest on its laurels of current LFP leadership, given the still-relevant constraints of LFP, including energy-density limits and upstream supply-chain vulnerabilities. MIIT officials have said that solid-state batteries will be a key focus area during the 15th FYP.⁵¹ Sectoral-level guidance for the 15th FYP, likely to be published through late 2026 or 2027, will provide more indications on the direction of travel.

Beyond domestic market signals, the other signpost to watch is how officials evaluate the strategic sensitivity of batteries. Recent policy signals all point in the direction of tightening control over battery exports and technology. The threshold of 300 Wh/kg for high-energy-density batteries in the proposed export controls from October 2025 is the clearest indicator so far of how officials will likely seek to restrict elements of battery technology leaving the domestic market. The publication of new rules scrutinizing the outbound investment and technology-transfer decisions of all Chinese firms will have a significant impact on battery manufacturers, making it more challenging for them to meet the strategic demands of Beijing and of governments in countries hosting their facilities. The State Council’s directive on supply-chain security also reflects the desire to increase China’s centrality in upstream battery materials to limit perceived import vulnerabilities. Last, progress on specific projects in politically sensitive markets like the EU and United States will reflect Beijing’s willingness to allow the export of advanced battery technology. Proposed conditions for technology transfer in investments in the EU under the EU’s proposed Industrial Accelerator Act in particular will be a key test for how China views battery technology in the current geopolitical environment.

South Korea’s battery sector reflects a state-led model of industrial upgrading in which executive-branch coordination, incumbent-firm dominance, and selective market intervention shape investment and innovation outcomes. Battery policy is produced through interministerial bargaining that aligns demand creation, manufacturing scale-up, and technology development. The country’s relatively small domestic market means industry has oriented itself toward exports and upgrading its position in global value chains, particularly in the high-value markets in the United States, Europe, and more recently China.

South Korea’s competitiveness in batteries—alongside other core industries like automobiles, semiconductors, petrochemicals, and shipbuilding—has depended on the government supporting the expansion of large conglomerates (the chaebol) to compete globally. As a result, South Korean companies have emerged as leading global battery suppliers, second only to Chinese ones in market share. But, while this approach has produced globally competitive firms, it has also entrenched structural vulnerabilities, particularly upstream import dependence and exposure to external regulatory and geopolitical shocks. Overall, the country’s battery strategy is best understood as coordinated supply-chain governance, with the state sequencing investment priorities and risk allocation in relation to national economic and strategic goals.

Institutional Mapping

Battery innovation and industrial policy are shaped primarily within the executive branch, through a fragmented system of interministerial coordination rather than a centralized “control tower.”⁵² Line ministries exercise primary agenda-setting and administrative authority, while the National Assembly plays a more limited role centered on budgetary authorization and oversight rather than direct authorship of sector-specific battery or innovation policy.⁵³ For battery industrial policy, agenda-setting and program design are led by line ministries.

During most of the 2020–2025 period, the Ministry of Trade, Industry and Energy was the dominant actor for battery industrial strategy, materials policy, and supply-chain coordination, exercising primary authority over battery industrial and energy-related policy. Following an October 2025 government reorganization by the Lee Jae Myung administration to integrate climate and energy policy, core battery industrial policy—including materials strategy and supply-chain coordination—has remained anchored in the successor Ministry of Trade, Industry and Resources. The Ministry of Science and ICT continues to govern battery-relevant R&D through national research budgeting, program evaluation, and innovation-system management, while the Ministry of Economy and Finance administers fiscal instruments, including tax incentives and budget approvals, that condition battery investment and commercialization. The newly established Ministry of Climate, Energy and Environment has taken on a more direct role in domestic battery-market development, energy R&D, and related demand-side infrastructure strategies.

Policy Background

South Korea’s battery policy in the 2010s shifted from small-sized lithium-ion batteries for consumer electronics toward mid- and large-sized batteries for electric vehicles (EVs) and energy storage systems (ESS) as the government redirected support toward automotive and grid-scale applications under a cross-ministerial competitiveness roadmap.⁵⁴ At the start of the decade, the country’s firms had a marginal position in the global EV battery market, reflecting the nascent state of EV demand and limited early production volumes for automotive batteries.⁵⁵ Building on earlier state-supported capability formation, the government reoriented battery policy toward EV deployment, large-scale manufacturing, and applied innovation tied directly to vehicle integration, relying heavily on coordination with large incumbent firms in the automotive and battery sectors.⁵⁶

By the end of the 2010s, South Korean firms accounted for about 30 percent of the global EV battery market, as a result of government-industry coordination to align battery innovation with the automotive sector, global value-chain positioning, and longer-term energy security and electrification objectives.⁵⁷Battery policy has become embedded within longer-term carbon-neutrality commitments and green-growth planning, which culminated in the Green New Deal framework after 2020.⁵⁸ President Lee Jae Myung has renewed this plan, connecting investment in ESS to broader industrial policy focused on AI and energy policies.⁵⁹

Between 2020 and 2025, South Korea relied primarily on demand-creating measures, complemented by targeted supply-side and regulatory tools, to support domestic battery manufacturing under shifting market conditions. In 2020–2022,EV purchase subsidies and public investment in charging infrastructure were the core demand signal for battery producers, linking manufacturing activity to EV deployment and electrification targets.⁶⁰ Effective July 2026, Korea introduced a points-based evaluation for EV subsidies that functions as a de facto localization incentive because the criteria are heavily weighted toward domestic supply chain contribution.⁶¹

As global battery markets became more subsidy- and rules-driven, policy analysis increasingly emphasized exposure to raw-material dependence, value-chain concentration, and intensifying international competition.⁶² Since taking office in 2025, the Lee administration has advanced a more explicit battery ecosystem package through the National Advanced Strategic Industry Committee, combining expanded EV and ESS subsidies with targeted support for economically sensitive battery supply-chain segments and the designation of new secondary battery industrial clusters.⁶³

Innovation Policy

Over the past five years, South Korea’s battery innovation policy has relied less on stand-alone program branding and more on direct public R&D funding, coordinated research initiatives, and shared innovation infrastructure, with strong continuity across administrations. In the later part of the Moon Jae-in administration (2020–2022), battery innovation policy was formalized through the government’s 2030 Secondary Battery Industry Development Strategy, which expanded public R&D support and institutionalized government-industry-academia research collaboration to advance next-generation batteries—including all-solid-state, lithium-metal, and lithium-sulfur technologies—alongside supporting materials, components, and evaluation infrastructure.⁶⁴

During the Yoon Suk Yeol administration (2022–2024), the battery innovation trajectory was reinforced and scaled through the Secondary Battery Industry Innovation Strategy, which committed large-scale public R&D investment through 2030 and prioritized next-generation battery technologies, including all-solid-state, lithium-metal, and lithium-sulfur batteries.⁶⁵ The strategy also introduced concrete innovation delivery mechanisms, including expanded pilot manufacturing lines, safety and performance testing and validation infrastructure, and public-private research networks and specialized R&D hubs, reflecting national initiative to secure global leadership in rechargeable-battery innovation.⁶⁶

The Lee administration has moved toward more explicit, target-driven innovation support, announcing approximately KRW 280 billion ($204 million) in public R&D funding for next-generation batteries alongside investments in manufacturing-process innovation and expanded safety and performance evaluation infrastructure, with policy attention also broadening to include sodium-ion batteries as a cost- and materials-diversification option for stationary energy storage.⁶⁷ In parallel, the government has elevated standards of development as a complementary innovation instrument, with the Korea Agency for Technology and Standards announcing a secondary battery-standardization strategy to develop twenty-five standards by 2030, covering safety, next-generation technologies, and circular-economy applications.⁶⁸

Foreign Policy

South Korea’s battery foreign policy reflects an industrial strategy that has become increasingly intertwined with managing alliances, particularly that with the United States.⁶⁹ This orientation was shaped by the experience with economic coercion by China in the late 2010s,⁷⁰ which showed the vulnerability of concentrated production networks and accelerated efforts to align critical industries—including batteries, EVs, and semiconductors—with trusted partners. In the post-COVID-19 period, as the United States and China intensified the securitization of clean-energy supply chains, the foreign, defense, and economic ministries moved to coordinate industrial policy more closely with alliance strategy, emphasizing friend-shoring into U.S. supply and production chains.⁷¹The U.S. Inflation Reduction Act of 2022 was a critical inflection point: South Korean policymakers and firms perceived its domestic content provisions as misaligned with alliance expectations, prompting diplomatic engagement to promote coordinated industrial strategy and accelerated localization of battery manufacturing in the United States.⁷²

The Korean Export-Import Bank (KEXIM) and the Korea Trade Insurance Corporation (K-Sure) helped guarantee several large battery plants, including LG Chem’s cathode material plant in Tennessee and SK On’s joint venture with Hyundai Motors in Georgia.⁷³ In parallel, South Korea continued to diversify battery and EV production into Europe, leveraging the EU’s favorable electrification policies and market-creation framework to hedge regulatory and geopolitical risk, which in Europe is seen as an economic development boon that supports job creation and regional industrial growth.⁷⁴ KEXIM and K-Sure helped finance SK On’s Hungary factory through loans and guarantees alongside other export credit agencies and commercial banks.⁷⁵

Domestic Market and Innovation

Over the past five years, South Korea’s domestic battery market has evolved through incremental state coordination and private investment, with capital concentrated in cell manufacturing and advanced materials rather than primary minerals extraction. The three leading battery manufacturers—LG Energy Solution, SK On, and Samsung SDI—have aggressively expanded capacity, with LG Energy Solution projected to increase EV battery output from 173.5 GWh in 2021 to over 1,000 GWh by 2030 and substantial scale-up by the other two firms.⁷⁶ Recent reporting, however, indicates that this expansion has slowed, with the three firms operating at about 50 percent utilization in 2025 amid intensifying competition from Chinese producers.⁷⁷

Upstream, the cathode market has consolidated around high-nickel chemistries, which now account for more than 80 percent of domestic production, while the sector remains heavily import-dependent for graphite, lithium, and nickel intermediates.⁷⁸ In a resource-poor economy reliant on imported critical minerals and a small domestic market, the battery industry has pursued value-chain upgrading and an export-oriented strategy, with secondary battery exports averaging about $8–10 billion annually in the early 2020s and domestic EV demand absorbing only a minority of locally produced cells.⁷⁹

The next-generation battery development landscape is policy-driven and institutionally concentrated, with advanced chemistry work embedded within incumbent cell manufacturers and coordinated through state-led public-private frameworks focused on industrial upgrading and supply-chain security.⁸⁰

Carnegie analysis identified a small set of firms developing next-generation lithium-ion variants, with activity concentrated in lithium-metal and all-solid-state batteries, both of which are prioritized under the national K-Battery strategy.⁸¹ Silicon-anode based technologies are more mature, treated as near-term improvements to existing lithium-ion supply chains and supported through manufacturing scale-up rather than extended demonstration. Lithium-sulfur batteries are at the pilot or research stage and are framed as longer-horizon options with commercialization targets extending into the late-2020s.⁸²Sodium-ion remainscomparativelyundeveloped. These patterns point to a development model in which technology policy, materials sourcing, and manufacturing capacity advance in parallel, reflecting coordinated battery supply-chain management rather than a market-led process.

Battery Hub Development

The maturation and technological upgrading of South Korea’s battery industry have been accompanied by the emergence of geographically distinct battery hubs, each anchored by incumbent conglomerates and shaped by legacy industrial geography. These hubs are the product of a centralized and programmatic mode of coordination in which central government ministries, the president’s office, and regional governments play an active role in agenda-setting, sequencing, and risk coordination. Chaebols sit at the center of these hubs, but they depend on dense supplier networks of small and medium-sized enterprises (SMEs) and, increasingly over the past decade, an emerging startup ecosystem—particularly in materials, equipment, software, and battery services—alongside public research and testing infrastructure.

While large-scale manufacturing and materials production are widely distributed, corporate R&D, pilot facilities, and systems integration capacity are heavily concentrated in the Seoul metropolitan area, where major battery and automotive firms maintain their core research and engineering functions. The hubs combine large-scale cell manufacturing, upstream materials production, vehicle integration, and corporate and public R&D, with functional differentiation across regions rather than replication. Taken together, the battery hubs form a functionally differentiated, incumbent-anchored ecosystem.⁸³ 

Pohang, Gyeongsangbuk-do Province

The city of Pohang is the primary domestic battery materials and precursor hub, anchored by the POSCO Group and its battery materials affiliates.⁸⁴ Building on Pohang’s legacy as a steel and heavy-industry center, POSCO Future M and affiliated firms have driven the clustering of cathode active materials (CAM), anode materials, and precursor production, alongside recycling and circular-economy functions.⁸⁵ Independent materials firms such as EcoPro and the POSCO-CNGR joint venture have also concentrated in the region, benefiting from proximity to POSCO-linked infrastructure, port access, and coordinated local government support.⁸⁶ In contrast to cell-focused hubs, Pohang’s specialization reflects the strategy to secure upstream competitiveness and reduce exposure to dependency in external materials.⁸⁷

Cheongju–Ochang, Chungcheongbuk-do Province

The Cheongju–Ochang area is one of the core cell manufacturing hubs, anchored by LG Energy Solution, whose Ochang Energy Plant combines large-scale production with adjacent R&D, testing, and pilot facilities, making the region a long-standing focal point of the battery industrial base.⁸⁸ Since the early 2020s, this has been reinforced by coordinated support from central and local government, including designation of the Chungbuk area as a secondary battery-materials and parts-equipment specialized industrial complex, targeted infrastructure investment, and workforce-training programs aligned with large-scale battery manufacturing needs.⁸⁹ In parallel, LG Energy Solution has continued to expand and upgrade production capacity at Ochang, including with investments in next-generation and lithium iron phosphate battery lines, further anchoring supplier co-location and applied research activity around the hub.⁹⁰

Outlook and Signposts

Leveraging the global production networks and state-supported capacity of the chaebols alongside a broad ecosystem of innovation-focused SMEs in materials and components, South Korea’s battery political economy is moving toward integrated industrial development across AI, energy, and batteries. This shift is seen in the growing emphasis on grid-scale storage and ESS, but given a resource- and energy-poor economy, energy insecurity—intensified by recent supply shocks and outsized dependence on fossil fuels to power domestic industries—raises questions about the feasibility of this pivot. Despite sustained efforts at industrial upgrading, the sector remains structurally reliant on China as a source of critical upstream inputs as well as on the United States and Europe as key markets for finished battery products and future facility expansion, which creates asymmetric vulnerability under conditions of strategic competition as well as dependencies on increasingly volatile policy environments. These risks are magnified by South Korea’s broader energy profile as a resource-poor, import-dependent economy, which ties battery policy directly to national energy security and external supply-chain stability.

Over the next year or two, key signposts will include whether the Lee administration translates strategic risk recognition into concrete diversification of materials sourcing, demand rebalancing, and standards-driven upgrading, as well as how it navigates alliance-linked industrial rules under U.S. and EU battery regimes. One market trend to watch is how decreasing demand for EVs, especially in the United States, has led some manufacturers to shift to ESS production.⁹¹ One of the most salient initiatives related to the battery industry is the administration’s “technology-led” economic growth strategy, which is anchored in expanded national R&D investment and focused on building “full-stack” capabilities across AI, energy, and strategic technologies.⁹² Moreover, the country’s poor energy security has meant the administration’s central bet on a “full-stack” AI strategy has reinforced the need for reliable, domestically anchored energy systems, creating further government investments in ESS in particular as part of a broader push for long-duration storage and grid stability.⁹³ Together, these developments will indicate whether South Korea’s battery strategy can evolve from scale-driven expansion toward a more resilient form of geopolitical industrial statecraft. 

Japan’s battery policy over the past decade reflects the country’s shift from technological leadership to falling behind South Korea and China. This is marked by increasingly explicit production and price targets, as well as a stronger linkage between economic security, decarbonization, and supply-chain build-out. After a steep decline in electric vehicle (EV) battery global market share between 2015 and 2022, the government responded by positioning batteries as a key pillar of its Green Growth and Green Transformation strategies. Successive policy documents have set quantitative targets for domestic manufacturing capacity, global market share, and battery-cost reductions, as well as prioritizing next-generation technologies. The domestic battery market remains constrained by slower EV adoption and shifting corporate strategies, as evidenced by postponed or canceled investments by major automakers. The fate of the battery industry will depend on three factors: whether the supply-side measures of the Ministry of Economy, Trade, and Industry (METI) and the New Energy and Industrial Technology Development Organization (NEDO) gain traction; whether Japanese batteries can find demand in the domestic and overseas transport sectors; and whether supply-chain and resource diplomacy will translate into a stable supply of material in a volatile geopolitical landscape.

Institutional Mapping

METI is the most important ministry for R&D in the energy sector, including for battery technology. It often convenes committees of industry and academic experts to discuss and formulate policies, which then become official strategies that it and other government entities implement. NEDO is a government-backed research and development agency that promotes technological innovation through its early-stage funding, including batteries and energy storage projects.⁹⁴ The Ministry of Education, Culture, Sports, Science and Technology and two funding agencies under it—the Japan Society for the Promotion of Science and the Japan Science and Technology Agency—also fund battery research.⁹⁵

Policy Background

Once a leading producer of battery technology, Japan has lost ground in the global market. From around 2006, the government identified battery development for electric and hybrid vehicles as a key area in its broader economic and energy strategies. In 2009, NEDO and fifteen companies initiated the Innovative Battery Basic Research Project to improve the reliability, safety, and energy density of lithium-ion batteries by 2015.⁹⁶ Despite these measures, Japanese firms’ global market share in battery technology rapidly shrank in the face of Chinese overcapacity. Their global market share in EV batteries fell from 51.7 percent in 2015 to 21.1 percent in 2020 and to around 1 percent in 2022.⁹⁷

To counter this decline, the government outlined in 2018 EV battery targets for 2030: 50–70 percent of new domestic passenger vehicle sales to be “next-generation” automobiles (including EVs, hybrids, and fuel-cell vehicles) and 20–30 percent to be EVs. It also included a 5–10 percent target for clean-diesel automobiles—a sector from which global automakers have been withdrawing in quick succession. The government took an all-of-the-above approach to transport decarbonization rather than pointing to any specific technology. To reach these targets, METI proposed a three-pronged strategy: a NEDO-supported industry-academic-government collaboration in batteries, fuel cells, power semiconductors, motors, and inverters; international cooperation to establish global supply chains and setting standards for well-to-wheel carbon reduction; and the creation of an ecosystem for battery reuse and recycling.⁹⁸

In 2020, then prime minister Yoshihide Suga announced the goal of reaching carbon neutrality by 2050. The Green Growth Strategy for 2050 Carbon Neutral that followed was an economy-wide industrial policy designed to reach that goal. In the transport sector, it set the target of reaching domestic EV battery manufacturing capacity of 100 GWh by 2030 and of EVs accounting for 100 percent of new car sales by 2035. The strategy also stated that Japanese companies’ global market share in next-generation batteries (fluoride-ion, zinc anode, and multivalent ion batteries) had fallen behind that of Chinese and South Korean firms, andset the goal of commercial adoption of these batteries by around 2035.⁹⁹ The METI specified these targets further and set a target of reaching a battery-pack price of JPY 10,000/kWh by 2030 in its 2021 Development of Next-Generation Batteries and Next-Generation Motors Project.¹⁰⁰ However, many of these technologies on which the government placed bets in 2020 are not the areas of innovation today.

The METI’s Battery Industry Strategy of 2022 positions battery-industry policy as encompassing the objectives of ensuring economic security, achieving carbon neutrality, and stimulating the domestic technology sector. It also designates batteries as a critical material under the Economic Security Promotion Act, which authorizes the government to protect battery supply chains, promote supply-chain diversification, and invest in production infrastructure and human resources. The ministry allocated JPY 265.8 billion ($193 million) for this purpose.¹⁰¹

The Battery Industry Strategy sets three goals to be achieved by 2030. First, it raises the target for domestic lithium-ion battery manufacturing capacity to 150 GWh/year and maintains the price target of JPY 10,000/kWh or less. Second, it aims for Japanese companies to reach a global manufacturing capacity of 600 GWh/year and 20 percent global market share. Third, it aims to commercialize all-solid-state batteries and to help Japanese manufacturers become world leaders in this technology. To achieve these targets, the strategy also spells out seven key initiatives, ranging from specific policy packages to securing upstream supply chains, rules for establishing new markets, and human resource development.¹⁰² In an apparent example of the effectiveness of this strategy, Toyota Motors and Kyoto University have developed an all-solid-state fluoride-ion battery with triple the volumetric capacity compared to lithium-ion batteries. They aim to commercialize the battery in EVs by 2035.¹⁰³ Honda and QuantumScape, a U.S.-based energy storage manufacturer, have announced a joint research agreement on solid-state battery development.¹⁰⁴

The METI’s battery targets were reaffirmed in the Green Transformation (GX) Promotion Act of 2023, a landmark law aimed at a fundamental shift in industrial structure toward low-carbon energy sources.¹⁰⁵ Under it, the government is supposed to invest up to JPY 7 trillion ($44 billion) in public and private investment, driven by the proceeds from the GX Transition Bonds (also known as the Japan Climate Transition Bonds), which were first issued in 2024.¹⁰⁶

Innovation Policy

NEDO is the main source of support for battery R&D and early-stage innovation. Its flagship Green Innovation Fund (GIF), launched in 2020 after the government set the goal of achieving carbon neutrality by 2050, supports companies and other organizations in developing technologies, including batteries, that contribute to meeting that target. The GIF aims to resolve technical issues to improve the performance and reduce the costs of batteries and energy-storage systems, as well as to commercialize advanced recycling technologies. The budget allocated for battery innovation under it is JPY 151 billion ($950 million).¹⁰⁷ The GIF provides grants to companies chosen through public bids, and NEDO participates in joint R&D with the grantees, which tend to be well-established companies in the automotive and battery industries. Aside from the GIF, NEDO has projects with budgets totaling JPY 2.2 billion ($14 million) over the 2021–2025 fiscal years to promote R&D in fluoride-ion and zinc anode batteries, and JPY 1.8 billion over the 2023–2027 for all solid-state batteries.¹⁰⁸

Foreign Policy

In the context of growing dependence on Chinese battery imports, Japan has reached bilateral agreements to diversify its supply chains. In addition to the many critical-minerals partnerships it has formed with minerals-producing countries, it announced in 2024 a closer collaborative relationship with the European Union to develop advanced materials for semiconductors, EV batteries, and renewable energy, and it signed in 2023 a memorandum of understanding with Canada to exchange know-how and establish a battery supply chain.¹⁰⁹ Similarly, Japan began to make headway in science cooperation with the United States during the Joe Biden administration.¹¹⁰ With the support of the Japan Bank for International Cooperation, companies have also invested in battery-production facilities and lithium-iron phosphate production in the United States.¹¹¹

Domestic Market and Innovation

Japan’s domestic battery market has struggled to grow amid the global trend toward transport electrification and, more recently, shifting market signals. The leading automakers bet on efficient internal combustion vehicles, hydrogen fuel cell vehicles, and hybrids, while their global competitors forged ahead with EVs. As noted above, Japan’s global market share in EV batteries was almost wiped out between 2015 and 2022. In 2024, annual battery production capacity stood at around 80 GWh.¹¹²

To make up for lost ground, several automakers announced bold plans to scale up EV and EV battery manufacturing in 2024. If these plans come to fruition, they could raise domestic battery manufacturing capacity from 80 GWh to 120 GWh.¹¹³ Toyota and Nissan had ambitious EV battery manufacturing plans centered on Kyushu. Nissan aimed to build a hub for exporting lithium-iron phosphate batteries and all-solid-state batteries to Asian markets and Toyota planned to manufacture batteries in Fukuoka for its Lexus vehicles, most of which are also exported to the rest of Asia.¹¹⁴ According to Carnegie data, Japan has focused on lithium-metal technology, including solid-state architecture as a long-term bet (there is little indication of attention to silicon or sodium-based chemistries).¹¹⁵ However, the ripple effects of slowing EV sales in the United States and elsewhere forced both Nissan and Toyota to pull back—Toyota postponing its Fukuoka plant beyond its 2028 target and Nissan cancelling its plant outright amid broader restructuring pressures.¹¹⁶ As an important export market, the United States affects Japanese carmakers’ investment decisions.

Battery Hub Development

While national strategy sets long-term targets, allocates budgets for main subsidies, and shapes support programs, there are semi-independent initiatives by prefectural governments, academic institutions, and industry to develop regional industrial clusters for battery manufacturing, four of which stand out.

Fukuoka Prefecture

The Fukuoka prefecture and the broader northern Kyushu region have a high concentration of car manufacturing and battery plants, including those operated by Toyota, Nissan, Daihatsu, and many other companies in related industries. The prefecture has a production capacity of 1.5 million vehicles per year. Capitalizing on this foundation, the prefecture’s government and industry players formed the Northern Kyushu Automotive Industry Green Advanced Hub Promotion Plan in December 2025, with the aim to create a world-class EV production base.¹¹⁷

Aichi Prefecture

The Aichi prefecture is home to a cluster of automobile and battery companies, as well as companies that handle battery materials. The Aichi Prefecture Next-Generation Battery Study Group was launched in 2023 to promote research and demonstration of next-generation batteries, develop a skilled workforce, and scale up the manufacturing base. It is chaired by the prefecture’s governor and includes industry representatives and academic experts.¹¹⁸

Kansai Region

Encompassing seven prefectures, the Kansai region has an established manufacturing base that boasts 30,000 workers across the battery supply chain. METI’s Kansai office leveraged these resources to launch the Kansai Battery Human Resources Development Consortium in 2024, which brings together forty-six participating actors from industry, academia, and local governments to foster the next generation of the battery workforce to implement METI’s 2022 Battery Industry Strategy.¹¹⁹

Ibaraki Prefecture

The Ibaraki prefecture is the site of the Advanced Battery Collaboration (ABC): an initiative between the National Institute for Materials Science, the University of Tokyo, Kyoto University, and companies including Mitsubishi Chemicals, Toyota, Murata Manufacturing, Asahi Kasei, and Softbank. The initiative aims to innovate battery technologies that can support the Internet of Things, autonomous driving, and vehicle-to-building bidirectional charging. In June 2026, the ABC published a set of tools and methods to support battery development and design, including simulation technology, advanced measurement technology, computational science, machine learning, and data science. This research initiative aims to advance R&D on a variety of next-generation batteries.¹²⁰

Outlook and Signposts

Japan’s domestic battery market is entering a decisive phase. On the supply-side policy front, the government continues to signal strong and even expanding support for the sector. According to METI, the country achieved a battery-cell production capacity of about 120 GWh as of early 2024 and is on track to reach the target of 150 GWh by 2030.¹²¹ The inclusion of batteries in the list of critical materials whose supply chains should be protected through government support indicates that batteries will continue to be central to Japan’s decarbonization, economic security, and industrial competitiveness agenda. Industry actors are cooperating with government efforts by consolidating capacity and reinforcing supply chains. Nine members of the Battery Association for Supply Chain, including major firms such as Hitachi, jointly established a battery production hub—Swiftfab Energy Systems—in April 2026, indicating a coordinated effort to scale manufacturing and strengthen international competitiveness.¹²² Government subsidies will help Swiftfab bring a new factory online by the end of 2030, whose production model is expected to cut equipment costs by 70 percent to become competitive with Chinese factories.¹²³

The trajectory of the battery sector will depend not only on public funding and domestic industry coordination, but also on battery demand. The government continues to promote transport electrification, and has allocated JPY 110 billion ($692 million) for purchases and production of low-emission vehicles (including BEVs) and JPY 50 billion ($317 million) for EV charging infrastructure.¹²⁴ The purchase subsidy has yielded a positive result, with EV sales from January to August 2026 reaching 81,158 units—2.3 times more than the same period a year before. However, the success of the subsidy has quickly exhausted theallottedbudget, leading METI to announce an early end to the application window for the subsidy by December 2026.¹²⁵ Overseas demand for Japanese batteries and cars is also an important factor that drives battery innovation and production. Slowing EV sales in the United States and continued dominance by Chinese manufacturers in global EV and battery markets are roadblocks for Japanese battery manufacturers.

Over the next year or two, several signposts will be critical. First, whether the government’s increased GX-related subsidies translate into measurable gains in domestic battery capacity and cost reductions toward the JPY 10,000/kWh target. Second, whether the government adopts stronger demand-side measures to accelerate domestic EV uptake. Japan’s EV adoption rate is low and falling, from 3.29 percent to 2.12 percent of new car sales between 2023 and 2024, compared to 8.1 percent in the United States, 15.4 percent in Europe, and 24.6 percent in China in 2024.¹²⁶ And third, the extent to which diplomatic efforts to secure upstream materials and overseas market access will bear fruit amid intensifying geopolitical competition. Together, these policy and market developments will determine whether battery strategy results in sustained industrial revival or remains constrained by global demand volatility and competitive pressures.

The European Union has built a substantial battery policy architecture over the past fifteen years, from clean-vehicle demand creation, battery industrial policy, market regulation, and innovation support, to boosting competitiveness. Its battery ecosystem remains structurally fragile, however, because policy ambition has outpaced industrial scale-up, cost competitiveness, and regional supply-chain depth. By the end of 2025, there were operational cell facilities and a sizeable installed capacity base, but actual cell supply still lagged far behind nameplate capacity and market demand, with a heavy dependence on non-European suppliers. The strongest demand anchor has been automotive electrification, especially the 2035 zero-emission target for cars and vans, while supply-focused instruments have included the European Battery Alliance (EBA), the Important Projects of Common European Interest (IPCEIs), the Green Deal Industrial Plan, the Net-Zero Industry Act, and the Clean Industrial Deal. Moreover, EU innovation policy has created a credible research base in next-generation technologies such as lithium-metal, solid-state, and sodium-ion batteries, though commercialization remains uncertain. Overall, the EU’s battery challenge has shifted from ecosystem creation to industrial execution, and the next phase will depend on whether it can effectively support ramp-up and scale-up, reduce competitiveness gaps, strengthen local value creation, and diversify battery demand beyond EVs into sectors such as energy storage and possibly defense.

Institutional Mapping

The EU battery ecosystem is shaped by a multi-level policy architecture comprising legislative institutions, regulatory and technical agencies, financial institutions, and industrial alliances. The European Council, which brings together EU heads of state and government, sets the broader political direction on relevant issues such as strategic autonomy, competitiveness, and supply-chain resilience.¹²⁷ The European Commission proposes and implements battery-related legislation, develops industrial strategies, and oversees EU funding and state-aid mechanisms. The European Parliament and the Council of the EU, which bring together ministers of the member states, act as co-legislators, negotiating, amending commission proposals, and adopting battery-related legislation. Financial institutions such as the European Investment Bank provide finance and help battery projects develop and scale, with the support of industrial alliances and stakeholder platforms, especially the EBA and InnoEnergy (formerly EIT InnoEnergy), that aim to connect and coordinate the battery industrial ecosystem.¹²⁸

Policy Background

Between 2010 and 2020, EU policy first aimed to create and drive electric vehicle (EV) and battery demand through EU vehicle decarbonization and charging rules, with a battery industry strategy to drive localization and innovation in battery manufacturing added in 2017.¹²⁹ The most impactful demand-side drivers stemmed from rules on vehicle emissions, minimum requirements for EV charging infrastructure, and clean-vehicle targets in public procurement rules.¹³⁰ On the industrial-policy side, the launch of the EBA in 2017, the first EU-wide platform to coordinate battery industrial strategy, was a decisive inflexion point.¹³¹ This was followed in 2018 by the Strategic Action Plan on Batteries and in 2019 by the first battery IPCEI, which allowed member states to support cross-border battery projects through pooled state aid.¹³² Finally, through battery-innovation policy instruments, the EU has built an R&D and R&I base connecting universities, laboratories, research institutes, and industry to develop next-generation batteries. These instruments included Horizon 2020, the Strategic Energy Technology Plan, Battery 2030+, and Batteries Europe (launched in 2019 as the EBA’s research and innovation arm).¹³³

When it comes to national policies in the same period, the trajectories of battery manufacturing in Germany, France, Hungary, and Poland illustrate two distinct national approaches within the EU’s ecosystem, differing in how they combined demand support, industrial policy, innovation funding, and attracting foreign investment. The four country level strategies are characterized by two contrasting models: Germany and France combined demand-side EV incentives (Umweltbonus and bonus écologique) with direct industrial policy support through IPCEI co-financing and innovation infrastructure, using public funds to build domestically anchored value chains. Poland and Hungary, by contrast, deployed no meaningful demand incentives and offered permissive regulatory environments, tax holidays, and infrastructure subsidies to attract Asian battery manufacturers, effectively prioritizing foreign direct investment (FDI) volume over technology transfer or domestic capability-building.

From 2020 to 2025, EU battery policy evolved into a more comprehensive industrial-policy framework to support the development of a battery ecosystem. For this, the EU combined market-shaping regulation, industrial coordination and supply support, and automotive demand-side support. By adopting the Batteries Regulation, it created a rulebook covering sustainability, safety, circularity, due diligence, carbon footprint, recycled content, labeling, and information requirements, thereby providing regulatory certainty for investors and manufacturers.¹³⁴ Moreover, the continued use of battery IPCEIs, the EBA, and EIT InnoEnergy helped crowd in investment and support the development of a battery industrial ecosystem. From 2023, EU clean industrial policy increasingly tied batteries to resilience, localization, and competitiveness, resulting in the Green Deal Industrial Plan and the Net-Zero Industry Act, which aim to strengthen the policy base for scaling battery manufacturing, and the Critical Raw Materials Act, which addresses upstream supply security.¹³⁵

These trends were reinforced by the 2025 Clean Industrial Deal, a policy framework aiming to address clean-technology competitiveness challenges (for example, high energy prices, strategic dependencies, and cumbersome permitting) by outlining several actions, including boosting circularity and raw-material supply security and demand for EU-made batteries, setting FDI conditions, and mobilizing more funding support.¹³⁶ Last, automotive policy remained the strongest demand signal throughout this period, chiefly through the 2023 revision of the EU’s CO₂ emissions performance standards for cars and vans, which set a 100 percent emissions-reduction target for new passenger cars and new light commercial vehicles by 2035.¹³⁷ However, the European Commission’s March 2025 Automotive Action Plan weakened this demand signal in the short term by allowing compliance with the 2025 target to be averaged over 2025–2027. This could weaken the 2035 zero-emission target itself if the December 2025 Automotive Package, which proposes the replacement of the 100 percent target with a 90 percent tailpipe-reduction requirement, were to be adopted.¹³⁸

The past five years have witnessed an intensification of member-state industrial policy for battery manufacturing, driven by the ambition to onshore strategic production capacity and the competitive pressure from U.S. and Chinese subsidy regimes. The Global Clean Investment Monitor dataset on European cell and electrode active material facilities tracks sixty-eight project-phase entries across eleven EU and European Economic Area countries, providing the most granular picture available of the continent’s battery manufacturing landscape. The data reveal an uneven spread of ambition. Hungary leads European countries with an estimated €2.47 billion ($2.8 billion) in facility investment, driven almost entirely by CATL’s 100 GWh Debrecen plant, followed by Germany (€1.66 billion), Finland (€1.46 billion), France (€0.88 billion), Spain (€0.82B), and Poland (€0.68 billion).

This reflects sharply different national strategies. Hungary has positioned itself as the preferred destination for Asian battery manufacturers through low-tax investment treaties and large industrial-park subsidies, while Germany has sought to nurture a domestically anchored supply chain through IPCEI co-financing and Fraunhofer FFB research infrastructure. France and Poland have largely depended on attracting European joint-venture cell plants (ACC/Stellantis at Douvrin and AESC at Douai in France, LG Energy Solution at Wrocław in Poland), supported by national grants and EU state aid.

France has deployed the most coherent national strategy, channeling support through its France 2030 investment program, which designated batteries as a priority industry alongside semiconductors, hydrogen, and advanced nuclear. Within the battery envelope, Verkor received approximately €650 million in France 2030 subsidies from the state and local authorities for its Dunkirk gigafactory, while ACC/Automotive Cells Company received about €1 billion in combined national and local public co-financing for its Douvrin plant.¹³⁹ In 2024, the European Commission approved a €2.9 billion state-aid envelope under the Temporary Crisis and Transition Framework, directed at scaling domestic battery, solar, and wind manufacturing capacity.¹⁴⁰

Germany has focused on underwriting the capital-expenditure risk of gigafactory projects through direct grants, loans from the KfW investment and development bank, and landside infrastructure support. The federal government and the Schleswig-Holstein state government committed €902 million in aid for Northvolt’s Heide factory. This consisted of €700 million in direct grants and €202 million in guarantees.¹⁴¹ On top of this state aid, €600 million was disbursed via KfW in the form of a convertible bond, for which the federal and state governments each provided 50 percent guarantees.¹⁴² Northvolt’s subsequent bankruptcy and the acquisition of its assets by U.S. lithium-sulfur firm Lyten, has exposed Germany to potential losses of up to €620 million in public funds and raised significant questions about the design of production-agnostic grant instruments.¹⁴³

Hungary and Poland have focused on permissive regulatory environments, infrastructure subsidies, and tax incentives rather than direct grants to technology development. As noted, Hungary has positioned itself as the EU’s pre-eminent FDI destination for Asian battery manufacturers, offering generous support packages estimated at over €2.5 billion across subsidies and infrastructure for the Debrecen industrial park alone.¹⁴⁴ Poland relied on its Special Economic Zone framework and EU cohesion funds to attract LG Energy Solution to open its Wrocław facility (which is now the largest battery plant in Europe at approximately 86 GWh). This project received €95 million in state aid and a €250 million loan from the European Bank for Reconstruction and Development.¹⁴⁵

Innovation Policy

EU battery innovation policy from 2020 to 2025 combined near-market industrial support with a technology-push research agenda designed to develop and scale capabilities in next-generation battery technologies, such as lithium-metal, solid-state, and sodium-ion batteries. This was not limited to chemistry breakthroughs and included sustainability by design, recyclability, digital tools, diagnostics, safety, interfaces, and manufacturability.¹⁴⁶ This policy agenda was pursued mainly through Horizon Europe, the €1.85 billion BATT4EU European Partnership, Battery 2030+, and a broad network of collaborative projects linking universities, research institutes, and industrial partners across the battery value chain.¹⁴⁷ Collaborative EU research initiatives with universities and laboratories played a major role in translating this innovation policy strategy into practice. For instance, the RENOVATE project—coordinated by Italy’s National Interuniversity Consortium of Materials Science and Technology and involving institutions such as Politecnico di Milano, the University of Pavia, the University of Milano-Bicocca, the Iberian Centre for Research in Energy Storage, and the Karlsruhe Institute of Technology—focuses on closed-loop end-of-life processes for lithium iron phosphate (LFP) and high-nickel battery chemistries.¹⁴⁸

Foreign Policy

The EU’s foreign policy from 2020 to 2025 played a supportive rather than central role in the development of the battery ecosystem. It focused less on directly attracting battery-manufacturing investment and more on improving the external conditions for battery industrialization through market access, supply resilience, regulatory cooperation, and innovation partnerships. Rather than operating through a central battery-diplomacy strategy, these efforts were embedded in broader external policy instruments, including trade agreements, the EU Global Gateway Strategy, and frameworks for technology and investment cooperation with third countries.¹⁴⁹ In terms of trade policy, relevant examples include market access and investment provisions in the EU-Chile Advanced Framework Agreement and Interim Trade Agreement and the EV and battery rules-of-origin provisions in the EU-UK Trade and Cooperation Agreement.¹⁵⁰ As for international investment and industrial partnerships, the EU signed its first Clean Trade and Investment Partnership with South Africa and deepened battery supply-chain cooperation with Japan, launching the EU-Japan Competitiveness Alliance in 2025 and securing an industry-led memorandum of understanding on battery cells, recycling, and circularity.¹⁵¹

Chinese battery investment in the EU has increasingly intersected with member-state foreign policy. Hungary’s Eastern Opening policy made it the EU’s primary recipient of Chinese FDI, with CATL’s €7.3 billion Debrecen plant anchored by €800 million in state aid.¹⁵² Spain’s abstention from voting to approve EU tariffs of Chinese EVs preceded CATL selecting Zaragoza for a joint venture with Stellantis.¹⁵³ After the EU imposed countervailing duties in 2024, China reportedly paused investments in member states that backed the measure while rewarding those that did not.¹⁵⁴ Across both cases, attracting investment seemed to come with limited technology transfer with CATL indicating it would not share know-how and planned to rotate approximately 2,000 Chinese workers through the facilities.¹⁵⁵

Domestic Market and Innovation

Over the past five years, the European battery market has entered a more mature yet still fragile phase, with several operational battery cell plants in countries such as France, Germany, Hungary, and Poland. Much of this capacity remains in the early stages of commercialization, and actual supply is far below nameplate-capacity levels, underscoring the challenge of ramping up and scaling in a competitive global environment, with Northvolt’s bankruptcy as a prime example.¹⁵⁶ By the end of 2025, Europe had nearly 140 GWh of cell supply against nearly 305 GWh of installed cell capacity, while regional battery demand reached around 327 GWh, which demonstrated a supply-demand gap and reliance on imports.¹⁵⁷ The battery market remained structurally tied to automotive electrification and was overwhelmingly shaped by EVs, which accounted for around 85 percent of battery demand in Europe in 2025 (Benchmark Mineral Intelligence, 2025).

In contrast, battery energy storage systems accounted for only about 7 percent of European battery demand in 2025, down from 9 percent in 2024, indicating that this market has not yet taken off (Benchmark Mineral Intelligence, 2025). Europe’s strong market preference for nickel-cobalt-manganese chemistries (approximately 92 percent production share in 2025) reflects a strategic focus on high-energy-density automotive cells, even though LFP (approximately 3 percent production share in 2025) is expected to grow (Benchmark Mineral Intelligence, 2026). A further structural issue is reliance on non-European battery suppliers: While battery gigafactory cell supply from EU-owned players was nearly 10 GWh at the end of 2025, the non-EU-owned supply, including from South Korean and Chinese players, was nearly 130 GWh. Finally, as of 2025, the EU faced a midstream gap, including a shortage of cathode active materials (CAM), with supply falling short of cell production, meaning gigafactories depended on imports.

This analysis is based on Carnegie’s dataset of next-generation battery companies, which summarizes where innovation activity is concentrated by chemistry category, maturity stage, and geography.¹⁵⁸ The dataset tracks sixteen European-domiciled next-generation battery companies across four chemistry categories: lithium-metal (six), silicon-anode (five), sodium-ion (four), and solid-state lithium-ion (one), spanning ten countries. Cell maturity ranges from prototype through pilot to commercial stage. Most remain at prototype or early pilot stage. The two most commercially advanced have anchored commercial facilities in South Korea and India, suggesting European demand and policy conditions have not yet been sufficient to retain next-generation manufacturing at scale. Blue Solutions (France) is the only company with commercial lithium-metal production (approximately 300 MWh/year), while TIAMAT (France) and ITEN (France) are the most advanced in sodium-ion and solid-state respectively.

Battery Hub Development

Germany

Germany has Europe’s most technologically integrated battery hub, combining incumbent cell manufacturing, OEM (original equipment manufacturer) vertical integration, and dedicated research infrastructure. CATL’s Thuringia plant and BASF’s Schwarzheide CAM facility anchored the early manufacturing base, while PowerCo’s Salzgitter gigafactory was Europe’s first OEM-owned cell production facility. The Fraunhofer Research Institution for Battery Cell Production (Fraunhofer FFB) in Münster, funded up to €500 million ($568 million) by the federal government and €320 million from the government of North Rhine-Westphalia, opened its prefab in 2024 and broke ground on its 20,000 square meter FFB fab in 2025, targeting gigawatt-scale production research in partnership with the University of Münster and RWTH Aachen.¹⁵⁹

France

France’s hub is concentrated in the Hauts-de-France Battery Valley, where three gigafactories emerged within a 100 km radius: ACC at Douvrin (2020), Envision AESC adjacent to Renault Douai (2021), and Verkor at Dunkirk (2022).¹⁶⁰ It is the most value-chain-complete, with Verkor’s Grenoble Innovation Centre feeding R&D into Dunkirk, TIAMAT (sodium-ion) and ITEN (solid-state microbatteries) adding next-generation depth, and recycling infrastructure from Eramet/Suez.¹⁶¹

Hungary

Hungary had Europe’s most concentrated FDI-led hub, built entirely with inward investment without a domestic OEM or R&D anchor. Five of the world’s ten largest battery manufacturers (Samsung SDI, SK On, CATL, EVE Power, and Sunwoda) have chosen the country as their European base, with over sixty projects worth €26.5 billion in FDI.¹⁶² The hub’s structural weakness is its internal competitive dynamic: Hungarian battery production fell by 51 percent in 2024, as Chinese entrants and South Korean incumbents competed for the same OEM contracts within the same geography.¹⁶³ The sole innovation development is Samsung SDI’s R&D center in Göd, one of only five such facilities in the world, which opened in 2025 in cooperation with Óbuda University and the Budapest University of Technology and Economics.¹⁶⁴

Outlook and Signposts

The EU battery market is entering a make-or-break scale-up phase in which policy success will depend on supporting battery manufacturers through the “valley of death” between construction and globally competitive mass production. Some gigafactories have begun production, but the sector still faces competitiveness challenges, including high energy prices, while Asian producers, especially Chinese ones, retain major cost advantages. Against this backdrop, the Clean Industrial Deal is likely to remain the umbrella policy framework for the next one to two years, as it combines competitiveness, circularity, affordable energy, and stronger demand creation for EU-made clean technologies. The most important near-term signpost is the extent to which the EU’s proposed Industrial Accelerator Act could boost demand for EU-made EVs and batteries and create a lead market through Made in EU requirements, while generating more local added value through FDI conditions, relating to technology transfer and ownership, mainly targeting Chinese investments.¹⁶⁵

Another signpost is whether the EU’s Battery Booster Facility established in 2026, which comprises €1.5 billion in interest-free, performance-based loans for cell producers and is part of the European Commission’s Automotive Package, could help address the sector’s financing gaps and support ramp-up and scale-up.¹⁶⁶ Additionally, a key policy question is whether the European Commission will develop additional production aid, primarily to support one to two years of industrial ramp-up and scale-up, as part of the future Competitiveness Fund, one of the key features of the EU’s Multiannual Financial Framework for 2028–2034.¹⁶⁷ A final signpost is battery-demand diversification and the extent to which other sectors, including energy storage and defense, will drive battery demand in Europe, given that recent EU budget and industrial discussions show defense rising as a funding and geopolitical priority and the increasing policy focus on grid resilience, cheaper electricity, renewable integration, and storage-related innovation.¹⁶⁸ This may create additional funding opportunities for battery producers and improve their business case.

The U.S. battery policy, market, and technology landscape stands at a critical junction due to shifting political, policy, and market factors. Despite a false start in the 2010s, the past five years of active industrial policy have helped spur a manufacturing renaissance and an array of innovative startups in next-generation battery technology. But the second Trump administration has deprioritized electric vehicles (EVs) and focused on stationary storage and defense-related applications, as well as on onshoring minerals production. The recent removal of EV subsidies and the related downgrade in demand have put the United States on track to meet domestic battery demand, largely thanks to large joint ventures with and projects by South Korean heavyweights. However, changing tariff rates and macro policy have forced established firms and startups to adjust their business and investment plans. Further, the U.S. market being nearly sufficient in cell production has also created a risk of lock-in effect, potentially leaving a limited market share for next-generation battery technology beyond some niche areas like drones and defense-specific applications. Nonetheless, these new demand segments may become material drivers for growth alongside increasing levels of policy support from the administration. 

Institutional Mapping

Under the direction of the White House, the Department of Energy (DoE) is the primary body that oversees battery technology policy, with input from other agencies. Funding for technology development must be authorized by Congress and, if not already included in annual budgets, will need to be drafted in new legislation. While the DoE can set targets and research agendas, it can only finance what has been authorized in legislation and according to guidance that is issued by the Department of Treasury. It has myriad offices that directly impact the U.S. battery outlook and value-chain development. Many of the battery-relevant DoE offices have key units for innovation, including the Advanced Research Projects Agency—Energy (ARPA-E). The Department of War’s Office of Industrial Base has taken an active role in battery procurement, but the market size is comparatively modest compared to civilian applications. 

Policy Background

Early industrial policy for battery technology spurred some manufacturing and innovations but it failed to develop economies of scale, because of political divisions and lack of coherent policy support. The United States was historically well positioned in this sector, with patents across leading universities and energy companies as well as early EV developments. Policy support for a battery industrial base began in 2010–2012 under the 2009 American Recovery and Reinvestment Act, a modest precursor to the Biden administration’s industrial policy. Under the act, lithium-ion battery cell manufacturing, supply chains, and innovation were awarded $1.5 billion.¹⁶⁹ The result was the development of some factories, but there was not enough demand in the domestic EV market to ensure survival. Starting in 2012, technology push policies emerged from the ARPA-E to support next-generation chemistries and materials.¹⁷⁰ Unfortunately, some of the firms did not survive, including the pioneer of lithium iron phosphate technology that sold its intellectual property to Chinese players.¹⁷¹ During the first Trump administration, the only notable battery policy developments were R&D initiatives like the Battery500 project that sought high-energy -density chemistries and the Joint Center for Energy Storage Research.¹⁷²

By 2020, a paradigm of strong, high-expenditure industrial policy had emerged with battery onshoring at its core. In 2021, a top-down battery strategy was developed by an interagency group with the goal of a domestic and secure battery supply chain by 2030.¹⁷³ The Inflation Reduction Act (IRA) of 2022 enacted supply-side subsidies for manufacturing, demand-side incentives for EV and batteries with domestic content, as well as loans to factories across the battery supply chain.¹⁷⁴ Prior to the IRA, the Bipartisan Infrastructure Law provided grants that supported battery supply chains, including the scale-up of advanced battery materials and some next-generation cell technologies.¹⁷⁵ These industrial policy measures deploying tens of billions of dollars prompted states like Michigan, Tennessee, and Georgia to issue their own support measures to help attract investment and create regional EV battery hubs. During the second Trump administration, policy support has been limited to supply-side and demand-side subsidies for stationary storage, not EVs. Most recently, the DoE has announced $500 million in funding for battery supply chains, emphasizing that the administration’s goals are likely to address upstream and midstream vulnerabilities.¹⁷⁶ 

Innovation Policy

On the innovation side, during the Biden administration there was a wave of funding and of academic, government, and industry consortiums to spur advances in next-generation cell chemistry, architecture, and material production. The DoE’s battery innovation goals were ambitious and included R&D to phase out domestic demand for nickel and cobalt and pursuing solid-state batteries and lithium-metal technologies that could have energy densities of 500 Wh/kg. The DoE provided some funding including R&D grants and ARPA-E funds continued with programs like EVS4ALL that targeted ultra-high-energy-density batteries.¹⁷⁷ Key consortia included the Li-Bridge working group that brought private-sector perspectives to government research, the Energy Storage Research Alliance of universities and the Argonne National Laboratory, and a workforce development program with the National Energy Technology Laboratory.¹⁷⁸ The National Science Foundation also supported university research for next-generation battery technology. At the time of writing, the fate of R&D support for this sector remains unclear given the Trump administration’s withdrawal of support for basic science and differing energy priorities. Although there has been financing for advanced battery material producers, the administration’s technology push priorities may change. 

Foreign Policy

The United States has taken a relatively limited approach to using foreign policy to help stimulate domestic battery development. The primary focus of foreign policy regarding battery technology has been to support minerals supply chains through foreign financing, trade agreements, and various types of bilateral and multilateral engagement.¹⁷⁹ The Biden administration sought science cooperation with South Korea and Japan in the battery sector.¹⁸⁰ The second Trump administration has made critical minerals, including battery metals, central to its foreign dealmaking; in one case it won Japanese investment into domestic lithium iron phosphate (LFP) production.¹⁸¹ The Biden administration raised tariffs on Chinese EVs to 100 percent, on Chinese batteries to 25 percent, and scheduled for 2026 a 25 percent tariff on graphite as well. The second Trump administration has not used targeted tariffs in the battery sector and the Biden administration’s tariff proposals regarding graphite were not actualized.¹⁸²

Domestic Market and Innovation

This unprecedented policy support has incubated a robust battery manufacturing industrial base. Battery cell manufacturing investments have dominated all other facets of the supply chain and clean technology investments. In 2024, they reached nearly $40 billion while all domestic minerals production was shy of $4 billion.¹⁸³ The United States is now home to 404 GWh of battery cell production that is either operational or soon to be, as well 655 GWh of capacity currently under construction. In all, over 1 TWh of cell capacity is likely to be operational by 2030, capable of fully supplying the U.S. market.¹⁸⁴ The repeal of the IRA’s EV subsidy reduced projected domestic demand about in half.¹⁸⁵ Of the thirty or so facilities, thirteen are partially or fully run by South Korean conglomerates while another ten involve European or Japanese partnerships.¹⁸⁶ The United States faces challenges in reaching autonomy, though: its battery ecosystem is primarily designed for nickel-cobalt based cells and faces significant self-sufficiency gaps in producing active materials, as well as chemical products of minerals, especially graphite.¹⁸⁷ Whether this can be fixed with tariffs remains to be seen. 

A notable array of American startups are pioneering novel battery chemistries. Carnegie analysis identified at least thirty firms (all startups) pioneering novel lithium-ion variant chemistries that have either at least begun pilot production or raised Series A investment.¹⁸⁸ Of these firms, eleven are developing silicon-anode blend technology, with six reaching commercial production (two of which are located in Germany and South Korea). The United States is home to three companies developing lithium-sulfur batteries, one of which is the only firm commercializing globally, with factory conversions underway in Europe and a new facility under construction in the United States. The largest share of next-generation U.S. companies are developing lithium-metal technology but only two have commercial production in pipeline and another two have announced target dates. One prominent sodium-ion firm declared bankruptcy while others are still at seed stage and not included.¹⁸⁹

Battery Hub Development

These developments in incumbent factories and next-generation technology have spurred the emergence of several battery hubs. On the innovation side, San Francisco and Boston are home to nearly all the American next-generation firms observed, likely due to proximity to universities like the Massachusetts Institute of Technology and Stanford.¹⁹⁰ While this analysis takes stock of the three states with the highest cell production—Georgia, Michigan, and Nevada—adjacent hubs are emerging across Kentucky, Tennessee, Indiana, and Ohio as well.¹⁹¹ At the time of writing, given policy shifts many of the latter were reeling from the immediate impact of job losses and potentially stranded assets.¹⁹²

Outside the scope of this analysis but nonetheless important are adjacent supply-chain hubs, like the emerging play for direct lithium extraction in the Smackover formation between Arkansas, Louisiana, and East Texas.¹⁹³ Active materials remain sparse (anode active materials and cathode active materials nameplate capacity is about 500 GWh, half of cell capacity), with observed material production in Michigan, Tennessee, Kentucky, and Georgia.¹⁹⁴ Washington has become an epicenter of silicon-anode production with several notable facilities under development and support for local government and universities. 

Michigan

Michigan—the historical epicenter of the American automobile industry—leads the country in battery cell capacity. Large-scale factories have emerged across the Detroit-Ann Arbor-Lansing triangle, in close proximity to multiple EV assembly hubs, the R&D headquarters of Ford and General Motors, including testing centers for battery cells.¹⁹⁵ Michigan’s Economic Development Corporation has long supported battery development through funding initiatives like the Critical Industry Program, the Strategic Outreach Attraction Reserve Fund, and the Jobs for Michigan Investment Fund Loan.¹⁹⁶ The state has also announced battery training programs for local universities, while other schools, including the University of Michigan, have expanded their battery engineering labs and programs.¹⁹⁷

Nevada

With the second-largest cell capacity among U.S. states, Nevada is the essential EV and battery hub producer for the West Coast market, due to the confluence of state support and location. In 2014, the Governor’s Office of Economic Development (GOED) approved a $1.25 billion tax package for a gigafactory—the Tahoe Reno Industrial Center (TRIC)—on a site on highway I-80, a one-day drive from California, the largest EV market in the United States.¹⁹⁸ Most of Nevada’s battery cell development is situated in the TRIC region and will now include LFP and lithium-sulfur production, as well as the country’s largest recycling hub in Carson City.¹⁹⁹ Many of these facilities benefit from tax abatement incentives from the GOED.²⁰⁰

Georgia

Georgia has emerged as the epicenter of battery and EV production in the United States. It is a unique example of transnational industrial development, after decades of South Korean conglomerates developing industrial and political ties to the state, which has easy access to highways and right-to-work labor laws. The Inflation Reduction Act accelerated this trend, especially as neighboring states like Alabama, South Carolina, and Tennessee developed EV production. To attract investment, Georgia’s state and local governments have provided generous tax breaks, likely in the range of hundreds of millions of dollars over time.²⁰¹ Alongside financial incentives, Georgia has provided education and vocational training programs to ready its labor force for these new technologies.²⁰² In addition, the state is home to some notable R&D centers for battery technology, including at Georgia Tech and in some corporate developments.²⁰³ 

Outlook and Signposts

While the U.S. battery ecosystem has evolved significantly, its future is likely precarious, especially with regard to developing globally competitive products. Dampened demand has caused some factories to pause while next-generation firms will face the issue of domestic lock-in where the market is well supplied with incumbent facilities. It remains unclear to what extent domestic battery-storage policy support and demand can cushion the political antagonism toward EVs and the ever-changing, tariff environment. During the second Trump administration, other drivers of battery demand could emerge for high-energy-density chemistries, including electric vertical take-off and landing (eVTOL) aircraft and drones, with the Pentagon aiming to procure 1 million drones by 2027 or 2028.²⁰⁴ Similarly, the artificial intelligence boom and surging demand for flexible power generation could also provide unforeseen tailwinds to the growth of the stationary power sector.²⁰⁵ The administration will continue to prioritize growth in the technology and defense sectors, as well as upstream minerals over downstream expansion of innovation. 

Key policies and signposts to consider largely extend beyond legislation and agency rules to macro geopolitical trends that shape the United States’ relationship with China. In the meantime, Department of Treasury rules on guidance for foreign entities of concern could impact subsidy access for existing battery factories and supply chains if they turn out to be more stringent than what was previously priced-in. On the demand side, it will be important to monitor whether the administration’s anti-EV agenda has reached the high-water mark or intensifies (for example, in the form of an EV tax in the forthcoming highway bill). Another key factor will be whether the administration strikes a grand bargain with China and, if so, how that would impact tariffs on batteries and minerals as well as inbound Chinese FDI. The United States has a battery ecosystem at its disposal—whether the administration chooses to ensure that it thrives or succumbs to pressure to preserve incumbents will be decisive for the country’s long-term stature in this key technology.

Canada’s entry into the battery industry has been defined by a two-pronged strategy of transitioning its existing interlinkage with the U.S. automotive supply chain and capturing more downstream value addition from domestically extracted critical minerals. Acknowledging the country’s lack of domestic market size, the main direction of battery development had been integration into a North American battery supply chain, with midstream battery chemicals and final product electric vehicles (EVs) slated primarily for the U.S. market. Bundling the complementary advantages of Canada and the United States (minerals and market size) aimed to create greater economies of scale and tariff walls that would allow North America’s industry to compete with China’s. The change in U.S. policies during the second Trump administration, and the related slowing in EV uptake in the United States, has buffeted the Canadian battery industry. Challenges in the relationship with Washington have also opened the door for forays into battery “multi-alignment,” though how much initial moves in this direction translate into meaningful policies remains to be seen.

Institutional Mapping

Canada’s battery industrial policy has been broadly led by ministerial efforts of Innovation, Science and Economic Development Canada (ISED) and Natural Resources Canada (NRCan). ISED is the innovation ministry and is focused on how research and industry can maintain or reach the technology frontier in various sectors. It has supported public investments in the battery supply chain through the Strategic Response Fund (earlier the Strategic Innovation Fund) and other policy vehicles. NRCan supports the development of natural resources and has been the leading ministry behind mineral resources development.

Policy Background

In 2019, the government introduced a zero-emission vehicle (ZEV) sales rebate, worth CAD 5,000 (UDS 3,537) for EVs and long-range hybrids and CAD 2,500 ($1,768) for short-range hybrids.²⁰⁶ This continued until 2025, dispersing CAD 2.6 billion ($1.8 billion) and supporting a minimum of 520,000 vehicle sales before funds were expended. With the release in 2019 of the government’s first comprehensive battery supply chain report, Mines to Mobility, official thinking turned to Canada’s position within the emerging electro-mobility supply chain.²⁰⁷ This set developing innovative industrial capacity at all stages of the minerals-EV supply chain as the goal for successive governments.²⁰⁸ 

The growing prominence of climate change in national consciousness opened space for the government to pursue robust demand-side EV policies. In 2023, the government introduced a ZEV sales mandate requiring 100 percent of new passenger vehicles sold in the country to be zero-emissions by 2035.²⁰⁹ On the supply side, battery investment tax credits (ITCs) were adopted in 2024 and 2026 to spur domestic battery production and maintain competitiveness with the United States following the passage of the latter’s Inflation Reduction Act. Tax credits of particular relevance include the Clean Electricity ITC (15 percent) that is relevant for battery storage infrastructure and the Clean Technology Manufacturing ITC (30 percent) that is applicable to minerals processing.

To secure lead investments in battery cell manufacturing, however, the ITCs have been sidelined in favor of an ad hoc approach of negotiating individual deals and support packages with battery majors. Special Contribution Agreements have been signed with LG and Volkswagen to build battery cell manufacturing facilities in Canada.²¹⁰ The expected public contribution is CAD 2.2 billion ($1.5 billion) in deal-specific construction support and CAD 28.2 billion in payouts linked to production outputs.²¹¹ ISED-managed public funds have also committed CAD 3.38 billion and dispersed CAD 1.41 billion to projects across the processing-battery-EV vertical, including in minerals processing and EV assembly.²¹²

The ISED and NRCan have spearheaded battery innovation policy, jointly producing the 2022 Critical Mineral Strategy and funding Canadian battery companies.²¹³ Public de-risking of mid-stage (TRL 3–8) battery-development companies was led by Sustainable Development Technology Canada, an independent publicly owned foundation, from 2021 to 2024. In 2021, it was allotted CAD 1 billion in funds to support clean-technology development de-risking, but a conflict of interest scandal led it to be rolled into ISED’s National Research Council.²¹⁴ Business Development Canada, Export Development Canada, and the Strategic Innovation Fund have also emerged as sources of funding for early-stage clean-technology companies.²¹⁵

Foreign Policy

Canada’s historical policy approach to the battery industry has focused on developing it onto the existing U.S.-Canada automotive supply chain; however, these dynamics are currently unclear and potentially being altered. While there was an effort under the previous government to diversify trade partners in the battery value chain, the battery industry was overwhelmingly defined within the context of the partnership with the United States. For instance, in 2020 the two countries released the Joint Action Plan on Critical Minerals Collaboration with the aim to reduce their reliance on China for key minerals.²¹⁶ To date, Canada has also previously aligned itself with the U.S. policy of using tariffs to block the import of Chinese-made EVs.²¹⁷ Today, amid increasingly contentious ties with Washington, Canada and the EU have begun deepening their strategies ties in critical sectors—including batteries and metals.²¹⁸

There have been some efforts in the upstream to coordinate multilateral critical-minerals sourcing efforts among like-minded allies to counter global dependency on Chinese clean technology. Canada used its G7 presidency in 2025 to launch the Critical Minerals Production Alliance, which aims to build multilateral policy coordination among the rich developed democracies to diversify global minerals supply chains.²¹⁹ This G7 leadership on critical minerals has been credited with attracting investments, including from Norway’s Vianode.²²⁰ These G7 efforts have been continued and expanded upon in 2026, with the rebranded Critical Minerals and Resilience Production Alliance.²²¹

Domestic Market and Innovation

Canada has three current giga-scale battery cell manufacturing projects of note, all in southern Ontario with links to the existing auto-manufacturing sector. LG owns an operating gigafactory with a capacity of 49.5 GWh, Volkswagen has 90 GWh in pipeline, and a 36 GWh Honda plant has been paused given market uncertainty.²²²

Canada is also positioning itself as a producer of midstream battery products such as anode active materials (AAM), cathode active materials (CAM), and precursor cathode active material (pCAM). Lacking sufficient domestic industrial consumption, processed CAM and AAM was originally planned to flow primarily to battery factories in the United States, reflecting the integrated North American battery-EV supply chain that has been the objective of battery industrial policy over the last five years. Whether this will indeed take place amid shifting winds is unclear. Canada has aimed to leverage its domestic minerals capacity and position itself as an alternative to Chinese input dependency in supplying the growing North American battery market. In Québec, Nouveau Monde Graphite plans to process graphite mined from its Matawinie facility into 44 ktpa of AAM, sufficient for approximately 73 GW of nickel-cobalt-manganese (NMC) batteries at 60:40 natural-to-synthetic graphite blends and 100 percent graphite-anode chemistries.²²³

Canadian graphite is of particular interest to the U.S. battery supply chain due to the lack of significant graphite reserves in the United States.²²⁴ The General Motors-POSCO joint venture has begun construction of a CAM materials plant in Québec that would be able to supply 30 ktpa of CAM a year.²²⁵ Also planned for southern Ontario is a synthetic graphite plant by Viaanode with a planned production capacity over 150 ktpa by the early 2030s.²²⁶ However, volatility in EV uptake has left its mark on midstream active-materials processing in Canada, with $1.6 billion in CAM investments by South Korean firms currently paused.²²⁷

Researchers from the University of Montreal and Hydro-Québec were pivotal in solving conductivity issues needed to make LFP battery chemistry feasible.²²⁸ However, lacking an industrial base for battery manufacturing at scale, Canadian battery intellectual property (IP) was primarily sold either in the United States and other countries. Primary innovation (technology invention) continued but secondary innovation (process innovation) needed for industrial scale-up has been unable to occur in Canada.²²⁹

Despite lacking a battery industrial base for the last fifteen years, Canada has had some notable successes in the area of battery IP development. The Dahn lab in Dalhousie University has a close research partnership with Tesla for developing energy-storage materials.²³⁰ The universities of Waterloo, Calgary, Alberta, and British Columbia also have strong centers for battery-material and electrochemistry research, with the middle two coordinating through the Western Canada Battery Consortium.²³¹ Hydro-Québec remains relevant in the battery-development space, developing in partnership with South Korea’s EcoPro Innovation in lithium-metal anodes for emerging lithium-metal chemistries.²³²

Battery Hub Development

Canada’s battery hubs have been built up from existing auto-manufacturing supply centers and along mineral extraction to processing transit corridors.

Ontario Peninsula

Canada’s two confirmed battery cell manufacturing facilities are in Windsor and St. Thomas in the Ontario peninsula, and they have grown out of the existing regional automotive supply chain. In addition, several forward and backwards linkages have developed. Toyota is producing battery packs in Woodstock and Cambridge, while various battery component producers have co-located in Windsor.²³³ St. Thomas will also host a synthetic-graphite facility for battery anodes, with planned production to start in 2028.²³⁴ The proximity of existing centers of electrochemistry research, such as the universities of Waterloo and Toronto, create opportunities for university-industry linkages and the creation of a more innovative regional battery cluster.

Northern Ontario

Building on the area’s nickel-cobalt deposits, and legacy nickel supply chain, northern Ontario has attracted increased interest in the development of upstream and midstream battery supply-chain investments. Existing technical capacity in nickel smelting has attracted several midstream battery-metal processors. Australia’s Wyloo, for instance, plans to process nickel mined from its mine site in Canada’s “ring of fire” and elsewhere to produce 50 ktpa of nickel pCAM in Sudbury, sufficient to meet 66 GWhs of NMC battery demand.²³⁵ Further north, Timmins sits on the world’s second-largest known nickel sulphide deposit and extraction is set to begin before the end of the decade with the estimated 48 ktpa Crawford Nickel Project.²³⁶

Bécancour, Québec

The city of Bécancour in Québec has been able to position itself as a hub of midstream processing. Its close proximity to Nouveau Monde Graphite’s Matawinie mine has won it the location for the firm’s planned move into AAM production. Bécancour is also home to the POSCO CAM facility and it has potential for far greater capacity in active-materials production as other investments are paused pending a clearer outlook in the battery market.

Outlook and Signposts

There has been continuity in the government’s approach since Mark Carney became prime minister in 2025, but with a relaxing of many domestic battery policies. Battery industrial policy is increasingly seen as a means of bolstering another energy industry that will support improved economic dynamism and trade diversification, rather than as a means of meeting climate objectives. Domestic demand-side consumer incentives have been weakened, but support has continued for supply-side policies throughout the minerals-to-battery vertical. For instance, in February 2026, Carney announced that the ZEV mandate would be dropped in favor of new vehicle-emissions standards. In practice, the government emission standards represent a loosening of the earlier policy objective of EV uptake, with a new EV sales target of 75 percent by 2035.²³⁷ In contrast, ITCs for battery manufacturing capital equipment will remain in force. The government has also made announcements regarding support to bolster extraction of battery minerals inputs.

There is greater potential for a break with the past in foreign policy. Instead of the highly U.S.-centric battery supply-chain development, Canada has made greater moves toward a policy of battery multi-alignment. Given the dominance of the United States when it comes to the country’s exports, it will remain central for the government’s battery policy. However, Canada is also pursuing new trade connections with markets such as Germany, France, Japan, Italy, and the Netherlands.²³⁸ The simultaneous challenges of dependence of Russian gas, Chinese dominance in clean-technology, and stress in the transatlantic relationship, have left Europe and others recognizing the strategic vulnerabilities in any form of energy overdependence on a particular power. Past Chinese restrictions regarding critical minerals, make the EU wary to trade energy dependency on one great power for any other. Canada’s proposition to Europe as a reliable source of energy diversification is also being extended to East Asia, India, and other middle powers.

The government does not view China solely in adversarial terms. It has negotiated a trade deal allowing market access for 49,000 Chinese-made EVs at the most-favored-nation tariff rate, in exchange for reduced tariffs on Canadian canola and other agri-food exports.²³⁹ While allowing this number of Chinese-made EVs into the Canadian market does not make for a new geoeconomic realignment, it shows an openness to diversify battery industrial policy beyond North American supply-chain regionalism. Any simultaneous integration between U.S. and Chinese battery supply chains will be an area of opportunity and challenge. U.S. Foreign Entity of Concern (FEOC) rules require that for batteries to be eligible for supply side credits 60 percent of production costs come from non-FEOC sources, a figure that will rise to 85 percent by 2030. Given Washington listing China as a covered nation, Chinese firm involvement in the Canadian battery industry would risk Canadian products falling afoul of FEOC requirements. Eventual Chinese EV assembly in Canada may also pose a headache in future negotiations around market access to the United States, especially given planned renegotiations of the United States-Mexico-Canada Agreement. Already, concerns about Canada being used as an entry point in the U.S. market have created additional challenges in U.S.-Canada trade talks. Further and more uncertain is where U.S.-Canadian trade relations land given recent tensions and Prime Minister Mark Carney’s broader diversification goals.

India’s share of global battery manufacturing is growing, but its industrial policies have had only a limited effect on the development of a secure and indigenous manufacturing base. Progress has been powered by the size of its market, the effectiveness of legacy conglomerates, geopolitical rebalancing, and successful subnational-level policies. Innovation continues to be an afterthought for most manufacturers, though, and greater investment and coordination by the government are necessary to ease reliance on technology licensing from foreign corporations, especially Chinese ones facing export restrictions. Over the rest of this decade, greater demand for battery storage, China-related tensions, and domestic electric vehicle (EV) adoption may see the beginning of a virtuous cycle for India’s battery manufacturers. Building a globally competitive manufacturing and innovation ecosystem will, however, require improvements in the business environment and clear-eyed government support for research into new battery supply chains, emerging chemistries, and measures to defend against Chinese competition.

Institutional Mapping

India’s battery policies are devised and generally coordinated by NITI Aayog (the National Institution for Transforming India), the government’s in-house think tank and planning commission. As NITI Aayog is under the prime minister’s authority, its priorities reflect those of the Prime Minister’s Office, while its policy proposals are implemented by other ministries. For battery policy, these are primarily the Ministries of Power, Heavy Industries, and Science and Technology. The Ministry of Heavy Industries (MHI) is the key implementing agency for demand- and supply-side policies, from incentivizing local battery manufacturing to subsidizing EV and battery energy storage systems (BESS) purchases. Innovation policy is generally implemented and coordinated through the Ministry of Science and Technology or the Ministry of Electronics and Information Technology (MEITy), both of which oversee active research programs. Funding for government schemes comes from parliament, which approves the national budget prepared by the Finance Ministry with guidance from the Prime Minister’s Office.

Policy Background

India’s policymakers have long been wary of the effects of an interruption in oil flows on inflation, economic growth, and national security.²⁴⁰ In 2013, this motivated the establishment of the National Electric Mobility Mission Plan to hasten EV adoption.²⁴¹ The core output was the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) program. In 2014–2019, FAME had an INR 895 billion budget ($120–$150 million), of which 17.6 percent went to EV and battery research and testing.²⁴² Though FAME has been described by the government as a successful pilot, only 41 percent of its budget was spent and the sale of only 280,000 EVs benefitted from subsidies, a fraction of the initial target of 15–16 million in cumulative EV and hybrid sales by 2020.²⁴³ India’s slow EV uptake and lack of manufacturing base fed energy security and climate concerns, and compared unfavorably with the success of China’s policies for EV and battery manufacturing and deployment. In 2019, three major initiatives were launched to address supply-side and demand-side deficiencies.²⁴⁴ The National Mission on Transformative Mobility and Battery Storage, led by NITI Aayog, was launched as an aegis for policies to localize EV production and promote large-scale domestic battery manufacturing.²⁴⁵ Finally, the MHI extended FAME (FAME-II) for five years with INR 115 billion ($1.2–1.6 billion) in funding for EV subsidies and charging infrastructure.²⁴⁶

From 2019 to 2021, the central government began to construct a battery industrial policy in order for India to claim a larger share of manufacturing value added and increase domestic demand for batteries. In 2021, the Production-Linked Incentive for Advanced Chemistry Cells (PLI-ACC) scheme was launched with $2.08 billion in funding by the MHI. When announced, it targeted 50 GWh of lithium-ion and 5 GWh of niche cell-manufacturing capacity by 2025. However, the plan has been plagued by challenges: ambitious investment timelines, unobtainable domestic value-added thresholds, visa delays for Chinese specialists, and bids considered without regard for the bidder’s battery-manufacturing experience. By October 2025, only 1.4 GWh of capacity had been installed and firms participating in the scheme were being penalized for delays rather than receiving subsidies for manufacturing.²⁴⁷ In spite of the spate of incentives, as of 2025, India was still almost entirely reliant on imports of foreign cells (85 percent of which were Chinese) for its rechargeable-battery needs.

To improve supply-side prospects the government is expected to release an Approved List of Battery Manufacturers for government-backed BESS. This is part of India Battery Vision 2047, a comprehensive plan for improving resource security, localizing and growing manufacturing, especially of novel cell chemistries, and increasing deployment.²⁴⁸ The duty on imports of battery-manufacturing equipment has also been eliminated. Individual states have pursued their own supply- and demand-side policies.²⁴⁹ Six offer tax exemptions and favorable interest rates for battery-manufacturing investment, seven have put forward capital subsidies, and fourteen have established grant, equity, or loan programs for battery R&D and startups.²⁵⁰ Several have also established land-banking or industrial-park programs that reduce lead time for factory development. The central government has developed regulations and standards for battery recycling and more recently sought to expand domestic rare earth production.²⁵¹

On the demand side, sales taxes on EVs and duties on lithium-ion cell imports have both been reduced to 5 percent. The FAME-II (2019–2024) and PM E-DRIVE (2024–2029) programs continue to subsidize EV sales, charging infrastructure, electrified public transit, and battery and EV testing.²⁵²

Innovation Policy

R&D funding has primarily been allocated to battery testing or recycling and swapping rather than to advanced chemistries. The MEITy, the ministry responsible for most battery innovation, has sought to facilitate research and commercialization through Centres of Excellence (CoEs) administered in cooperation with private partners. They transfer their research to industry partners and also offer pilot production facilities. The CoE in Pune focuses on battery cell research, especially lithium-ion and sodium-ion, while the CoE in Hyderabad focuses on battery recycling.²⁵³ The Anusandhan National Research Foundation, launched in 2024, is funding research into EV batteries for tropical environments—equipped with more robust battery-management and thermal-management systems to mitigate degradation due to higher ambient temperatures and humidity—and cells but it is too early to evaluate the results.²⁵⁴

Foreign Policy

India’s battery foreign policy has focused on upstream supply chains. KABIL, a joint venture of the Ministry of Mines and three of its state-owned enterprises (SOEs), has signed agreements to promote critical-minerals mining and processing investment with Australia’s government and two mining SOEs owned by Chile and a province of Argentina respectively.²⁵⁵ On the manufacturing side, the Roadmap for U.S.-India Initiative to Build Safe and Secure Global Clean Energy Supply Chains discussed financing for clean-energy technologies including batteries but featured little of substance; as a Biden-era engagement, it has since been disbanded.²⁵⁶ The same is true of the working groups established under the EU-India Trade and Technology Council.²⁵⁷ Engagement with Japan has been more robust: The MHI and Japan’s Ministry of Economy, Trade, and Industry have agreed to a memorandum of cooperation to build a stronger battery supply chain. The two countries have also organized roundtables to strengthen corporate ties in the battery sector. These efforts have been led by the embassy of India in Japan and the Japan External Trade Organization.²⁵⁸

Domestic Market and Innovation

Government policy has had only a limited effect on domestic battery pack, cell, and materials production capacity. Nonetheless, the scale of the domestic market has been a growth driver. Startups, domestic companies, and foreign conglomerates are gradually expanding India’s battery manufacturing base. In 2020–2025, manufacturing investment totaled $7.5 billion, with 2024 alone seeing $2.5 billion in investment. If all commitments are realized, the country could have thirty gigafactories in operation by 2030.²⁵⁹ Industry analysts project 13 percent of cell demand will be met by domestic production by 2030.²⁶⁰ This may be feasible: The companies that did not win bids in the PLI-ACC were battery-industry stalwarts and they have moved forward with plants that will pilot domestic lithium iron phosphate (LFP) cell manufacturing in 2026 and 2027. However, most of their technology, upstream materials, and manufacturing equipment will continue to come primarily from China, followed by South Korea.²⁶¹

Analyses have suggested that anode and electrolyte production could be localized, but cathode production will be more challenging to onshore at industrial scale.²⁶² Battery manufacturers have so far conducted only limited R&D and the capital costs of each facility (estimated at $325–400 million per 5 GWh) disincentivize experimentation with chemistries or production methods.²⁶³ Without an expansion of financing mechanisms such as offtake agreements—only one is in force—this low-innovation, high-foreign-dependence situation will persist.²⁶⁴

Domestic Market and Innovation

Domestic battery innovation has been limited by the lack of government or private R&D spending. While there are around a dozen firms active in the battery-chemistry R&D space, they have not yet made strides to scalable, commercializable domestic products. Only one major manufacturer has sought to develop an indigenous LFP cell.²⁶⁵ Battery-innovation research focuses primarily on incremental changes rather than more cutting-edge research. Most research (seventy out of 187 identified projects in 2019–2024) has focused on lithium-ion batteries, especially LFP. A smaller number (thirty-one projects) has focused on developing sodium-ion and aluminum-ion batteries.²⁶⁶ To address India’s dependence on Chinese battery components, at least two firms are working on LFP cathode active materials (CAM) designs, and one company is developing a graphite anode, but still needs to improve the quality of its synthetic graphite product.²⁶⁷

Battery Hub Development

In its nascent ecosystem, several of India’s states are expected to host large factories by the end of the decade, but research ecosystems will lag behind. Hubs appear to be emerging in India’s industrial champions: Gujarat and Tamil Nadu. In addition, the states of Telangana and Andhra Pradesh are the sites of major in-development factories of established renewable-energy players that will be among India’s largest once operational.²⁶⁸

Gujarat

Battery-pack assembly began in Gujarat in 2017. Since then, foreign players and major Indian conglomerates have invested around $5.26 billion in manufacturing in the state, moving from assembly to pilot cell production. Key clusters are located near Vadodara, Ahmedabad, and Jamnagar. The state is projected to have 76.2 GWh of manufacturing capacity by 2030 if all commitments are realized. Most manufacturing will continue to rely on licensed technology.²⁶⁹ Opportunities for synergy with Gujarat’s established vehicle-manufacturing industry are strong, with proximity to clients likely to cement the state’s position as a hub for vertically integrated EV manufacturing.²⁷⁰ Conglomerates active in the state have also expressed ambitions to build gigafactories capable of competing in every part of the green industrial supply chain.

Tamil Nadu

If all commitments are fulfilled, Tamil Nadu will have 138.9 GWh of manufacturing capacity by 2030, outpacing all other states.²⁷¹ It is already home to the furthest-advanced of the PLI-ACC recipients, a factory in the western part of the state, and major conglomerates have begun to invest in research and manufacturing facilities around Chennai, the state capital.²⁷² The Indian Institute of Technology Madras in Chennai, one of the country’s flagship research universities, is a nascent center for battery research. Tamil Nadu also benefits from neighboring the state of Bangalore, India’s Silicon Valley, where several companies have announced plans for battery materials and cell factories.²⁷³

Outlook and Signposts

At the beginning of this decade, NITI Aayog set a target of 30 percent EV market penetration, across vehicle classes, by 2030.²⁷⁴ Meeting this target will require an estimated 145–158 GWh of battery production in addition to 40 GWh for battery-storage targets.²⁷⁵ There is no scenario in which India would have the manufacturing capacity to meet that demand domestically by 2030. But the rising tide of private investment, if combined with smart state-level investment incentives and national-level innovation funding, may push the country closer not just to that goal, but to being a globally competitive player in battery manufacturing and research. For now, India’s priority is to begin to claim a share of cell production and reduce its dependence on foreign suppliers. This looks likely to happen, but slowly. Important factors to monitor are the condition of the middle class, which has recently stagnated and is an important driver of demand for two- and four-wheel vehicles, as well as the implications of state-level political turnover for the stability of investment memorandums of understanding and state-level policies to reduce investment barriers.