China puts new restrictions on EV battery technology in latest move to consolidate dominance

China has put export restrictions on technologies critical for producing electric vehicle batteries, in a move to consolidate its dominance in the sector that has contributed to the country’s lead in the global EV race.

Several technologies used to manufacture EV batteries and process lithium, a critical mineral for batteries, were added to the government’s export control list.

China has emerged as a leading player in the competitive global EV market, thanks in part to its ability to develop high-performance, cost-effective batteries through its comprehensive supply chain, from raw material processing to battery manufacturing.

China’s CATL, the world’s largest EV battery producer and a key supplier of Tesla, has plants in Germany and Hungary and has plans for a joint venture factory in Spain with Stellantis, the owner of Fiat and Chrysler. It is also licensing its technology to be used in a Ford EV battery plant under construction in Michigan. A Ford spokesperson told WNN the company is “not affected” by the new restrictions.

And Gotion, another major EV battery maker in China, has plans to build a production plant in Illinois.

WNN has reached out to CATL, BYD and Gotion for comment.

Analysts said the true impact of the new export controls remains uncertain, as details are still unclear.

Lee noted the restrictions “appear to target upstream process technologies… rather than battery cell and module manufacturing.”

Since CATL’s plants in Germany and Hungary focus on cell and module production and do not appear to replicate the restricted processes locally, the near-term effect may be limited, she said.

China’s dominance in EV batteries

One part of the newly announced restrictions surrounds the battery cathode production technology for the making of lithium iron phosphate (LFP) batteries, a type of lithium-ion battery that has become increasingly popular in EVs in the last five years for its lower price and greater safety. Another part focuses on the processing, refinement and extraction of lithium.

China dominates the production of LFP batteries and the processing of lithium globally, according to Fastmarkets, a United Kingdom-based research company. Last year, it held 94% market share for LFP production capacity and provided 70% of global processed lithium production.