How the US can get back in the driver’s seat of its battery future

The fragility of the global critical mineral supply chain has been thrust into the spotlight in recent months, serving as a stark warning for the future of the batteries needed to advance our electric future.

Recent action from China – the predominant supplier of lithium-ion batteries – to restrict the export of key minerals crucial to battery manufacturing is a clear warning sign for the industry. Additional restrictions have been proposed for related lithium-ion components including raw material extraction technology, electrode materials, and manufacturing equipment, further highlighting the vulnerability of relying on foreign sources for the critical building blocks that underpin the energy transition.  

Conventional wisdom suggests that this challenge can be addressed by boosting domestic, United States lithium-ion battery production. The US Department of Energy has ramped up investment to strengthen the domestic battery and critical minerals industries and the incoming Trump administration is also expected to prioritize supply chain resilience as part of its broader energy and national security agendas. With bipartisan support for reducing reliance on foreign-controlled minerals, policymakers are considering additional strategies such as fostering international alliances with mineral-rich nations and accelerating permitting for domestic mining operations. 

These approaches are essential actions but on their own they are insufficient to address the deeper problem concerning America’s energy security. To secure the country’s leadership in the clean energy economy, a more holistic approach, that moves beyond replicating the existing lithium supply chain, is necessary.

A truly resilient strategy would involve diversifying into battery chemistries that leverage supply chains independent of lithium-ion, and using the differentiated advantages that alternative batteries offer, to “compete and win differently.” 

Beyond lithium-ion

Efforts to strengthen domestic lithium-ion production highlight the urgency of the issue but a closer examination of the implications of a domestic supply chain shows there are significant challenges to be overcome. 

Lithium mining projects often struggle to meet investor return expectations due to high upfront costs and lengthy qualification periods which can extend over several years. For instance, the Thacker Pass lithium mine project, in Nevada, is projected to start production in 2027, six years after its initial approval and with full operational capacity expected even later. 

Assuming timeline challenges can be overcome, financial success is far from secure from lithium extraction. Lithium prices have plummeted by more than 80% from their 2022 peak, deterring investment. Elevated interest rates and uncertain demand for the electric vehicles that rely on lithium have also contributed to a challenging financial landscape. Refining raw materials such as lithium, cobalt, and graphite poses further obstacles as countries such as China and Indonesia dominate these processes through cost advantages driven by looser environmental regulation and access to cheap coal-fired power. 

Even if a US lithium-ion supply chain does materialize, the battle will still not be won. China’s existing, massive battery manufacturing scale gives it both daunting volume advantages and battery manufacturing experience. After producing several billion battery cells, Chinese businesses have become extremely efficient at it! As Northvolt’s travails in Europe showed us, there is virtually no way to produce lithium-ion batteries cost-effectively without involving China’s expertise, and therefore no way to win on cost. While tariffs can level the playing field to a degree, they can’t overcome structural advantages.  

A better solution 

A more comprehensive approach involves the diversification of battery chemistry, which has the twofold potential to decrease dependence on key minerals controlled by foreign sources and drive technological innovation in the United States. Developing an arsenal of alternative battery technology is key to this solution. Transitioning to alternative battery chemistry would enable the United States to gain greater control over the entire battery production process – from raw materials to manufacturing and deployment – ultimately enhancing cost efficiency and ushering in a new era of favorable supply contract terms with trade partners. 

Noted business strategist Micheal Porter famously observed that there are two fundamental ways to compete – low cost or differentiation. New battery chemistry with distinct performance characteristics enable differentiation by offering advantages such as improved battery safety or non-toxicity.  

Lithium batteries, while widely used, are highly flammable, toxic, and pose significant risks to life and property, as evidenced by multiple high-profile battery fires in recent years. Already we are seeing local pushback to lithium-ion storage projects due to these safety risks.  

Many non-lithium-ion chemistries are non-flammable. For example, Alsym Energy has developed an alternative battery, Alsym Green, that is inherently non-flammable, uses non-toxic materials, and yet still offers high performance. As a result, it can be effectively and affordably deployed in many places where lithium-ion systems cannot, due to safety – inside buildings in dense urban environments, in highly combustible environments such as chemical facilities, alongside high-value equipment like that in data centers, to name a few examples.  

Other alternative chemistries can offer advantages over lithium-ion in discharge duration, fast response, or power and energy decoupling. These differentiated offerings can “compete differently” against lithium-ion batteries and win in market segments that prioritize these advantages. 

High stakes

China’s recent actions have delivered a clear warning: the clean energy economy cannot flourish when its building blocks are controlled by foreign sources. The chances of building a US lithium-ion supply chain are lower than are being represented, however. The stakes are too high to gamble our nation’s economic security on one technology and an unpredictable supply chain. We have seen the risks associated with OPEC’s [the Organization of the Petroleum Exporting Countries] domination of the oil industry and cannot afford a new such organization to become entrenched in clean energy. 

To get back in the driver’s seat of its battery future, the United States must prioritize a holistic battery approach. Yes, we should support domestic lithium-ion battery production but we should also expand support to include the research, development, and manufacturing of alternative battery chemistries. Diversifying our approach not only strengthens the clean energy economy but also positions the United States as a global leader in energy innovation. 

The path forward demands bold action, diverse solutions, and a commitment to long-term sustainability. Now is the time to act decisively.

About the author: Mukesh Chatter is chief executive officer of battery maker Alsym Energy.