U.S. leaps over China in battery investment — for now

, Senior Science and Economics Correspondent
Source: Global Clean Investment Monitor: Electric Vehicles and Batteries, Rhodium Group and the Massachusetts Institute of Technology Center for Energy and Environmental Policy Research.

The United States overtook clean energy giant China to become the world’s leading investor in battery manufacturing last year, but that recent momentum may be in jeopardy.

The role reversal in battery-investment dominance is the result of two converging trends: tax credits from the 2022 Inflation Reduction Act stimulating more investments in the U.S. and China pulling back its expenditures in the sector, according to a recent analysis by Rhodium Group and the Massachusetts Institute of Technology’s Center for Energy and Environmental Research.

The U.S. has laid the groundwork for a “renaissance in battery manufacturing,” said Hannah Pitt, director of Rhodium’s energy and climate practice. “We’re really contending for a place in battery manufacturing globally.”

China has invested less and less in battery manufacturing since 2022. The government’s aggressive support of the sector had led to a glut of batteries and dropping global prices, while, at the same time, some of its subsidies for electric vehicles were phased out.

The U.S. may not hang onto the top spot in global battery investment, however. The tax credits that stimulated such growth in the domestic battery manufacturing sector face an uncertain future, as lawmakers on Capitol Hill debate rolling back many of the IRA’s provisions.

The changes being debated in Congress would be a “double whammy” for the battery market, Pitt said, because they could potentially hit both the supply-side of the market, by cutting tax credits for manufacturing, and the demand-side, by axing regulations that support electric vehicle and clean energy adoption.

Amidst the uncertainty, some investors are already hitting the brakes. In the first quarter of 2025, overall investments in U.S. battery manufacturing dipped slightly, as seen in the chart above. U.S. companies canceled more than $6 billion in battery projects in the period, the most since Rhodium started tracking the data in 2018.

The drive to eliminate the policies that support battery manufacturing comes primarily from President Donald Trump and Republicans in Congress.

Republican districts have the most to lose, however, as battery manufacturing investments have disproportionately gone to red states and districts, Pitt said.

“There’s a whole industry that seems on the line here that’s a pretty critical industry for the technology of this century.”