The US promised to make electric vehicles a centerpiece of its clean energy and industrial strategy, pledging billions for domestic manufacturing, critical mineral partnerships, and tax incentives.  

The plan failed.  

By almost every measure, the US remains far behind. China dominates the entire EV supply chain — from mineral mining to battery development, car manufacturing, operating software development, and even car shipping. Instead of fighting back, Washington now looks ready to raise the white surrender flag. 

The One Big Beautiful Bill Act eliminated the $7,500 federal tax credit for new electric vehicles. The administration also ended the flow of tens of billions in subsidies for EV battery plants, critical mineral projects, and clean energy infrastructure. At the same time, the US is imposing new steep tariffs on Chinese refined graphite, an essential ingredient for batteries. These follow 100% tariffs imposed on Chinese-made EVs in 2024, hoping to protect the American market from an influx of cheap imports.  

Even before the Trump administration took office, the US electric vehicle strategy was slow. By mid-2025, only a handful of vehicle models qualified for the full tax credit due to strict requirements for battery sourcing and components. The US also still lacks the infrastructure to refine and process key minerals like lithium, graphite, and cobalt — tasks that are overwhelmingly carried out in China, which refines over 80% of the world’s supply of many of these materials. Efforts to reshore or “friend-shore” supply chains will stretch well into the next decade. 

Another problem is the lack of a unified national EV strategy. Federal, state, and private-sector efforts often work in parallel rather than in coordination. Tariffs, though politically expedient, do little to build competitive capacity. They block competition, which buys American companies time, but without guaranteeing a viable alternative. 

In contrast, China has spent the past two decades building an end-to-end EV ecosystem. Six of the world’s top 10 EV manufacturers are Chinese, including BYD, which has overtaken Tesla as the world’s largest EV seller. China now produces over 60% of all electric vehicles globally, and its domestic market accounts for more than half of global EV sales. 

China also dominates the beating heart of the electric vehicle: the battery. Chinese firms CATL and BYD control almost half of global battery production, with CATL’s market share around 37.9% and BYD at 17.2%. China produces over 75% of the world’s lithium-ion battery cells, about 70% of cathodes, and 85% of anodes, two critical battery components. This battery advantage allows Chinese companies to offer EVs at dramatically lower prices than their American and European rivals. 

China even controls the upstream supply chains. It processes around 60% of the world’s lithium and 70% of cobalt, the minerals which make up the backbone of modern batteries. It has spent years securing long-term contracts with mining operations in the Democratic Republic of Congo (cobalt), Indonesia (nickel), and the lithium triangle of Argentina, Bolivia, and Chile.  

For the most part, US tech companies have chosen not to enter the auto manufacturing business, limiting their role to providing fragmented services, such as infotainment systems, rather than building end-to-end digital car platforms. Tesla remains an exception, along with Qualcomm, which exports its Digital Chassis “end-to-end platform” to China.  

As a result, American vehicles lag in the level of technological cohesion now standard in Chinese models. Huawei and Xiaomi, among others, enable drivers to unlock, start the car, get directions, play music, and many other features without the friction of pairing or syncing devices. 

To stay in the race, some American carmakers, such as Ford, are simply pivoting from EVs to hybrids — a notable concession to China’s dominance in the electric drivetrain. This strategy remains risky: Chinese EVs are also outperforming their American and European counterparts in terms of manufacturing cost efficiency and build quality. China’s entry-level BYD vehicles sell for under $10,000 — a third of the price of the most affordable electric vehicle in the US.  

The race is not yet over. But as the US plays catch-up, China’s EV industry is redefining modern mobility. 

Elly Rostoum is a Google Public Policy Fellow with the Center for European Policy Analysis (CEPA). She is a Lecturer at Johns Hopkins University. You can find out more about her work here: www.EllyRostoum.com 

Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.

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