Automakers expand US battery storage supply but China still key
- Automaker investments will help to increase U.S. battery storage production but many developers will remain dependent on imported cells and they must navigate tariff and policy risks.
April 13 – U.S. battery storage installations rose 30% in 2025 to a record 58 GWh and a further 60 GWh is expected to be installed this year, according to the U.S. Energy Storage Market Outlook Q1 2026, published by Benchmark Mineral Intelligence and the Solar Energy Industries Association (SEIA).
Demand has soared as developers, utilities and grid operators seek more dispatchable power sources to complement rising clean power output and meet surging power demand from data centers. U.S. installed storage capacity was 165 GWh in Q1 2026, including 137 GWh of utility-scale facilities.
Developers have largely depended on imported battery systems but U.S. manufacturers are responding to rising demand and supportive tax and tariff policies by ramping up capacity while automakers are converting vehicle cell factories.
Half of U.S. battery storage imports between 2021 and Q1 2025 came from China, where costs are far lower, figures from S&P Global showed. Chinese battery systems are subject to import tariffs and U.S. systems benefit from domestic content credits but a lack of American manufacturing capacity remains an issue for many developers.
Thomas Mulvihill, Power Research Associate at Enverus, told Reuters Events, said:
Even where domestic manufacturing can be economically advantaged on paper, imports can remain necessary and competitive in practice,
Enverus estimates the cost of Chinese battery system imports at $95/kWh before import tariffs, in comparison with $139/kWh for U.S. products, but in some cases the latter can be reduced by as much as $90/kWh through tax credits and domestic content bonuses.
U.S. manufacturing capacity is rising but capacity for final assembly is ramping up faster than that for cells and other upstream components. Battery cells represent around 40% of system costs and most are imported from China.
Mulvihill said,
By 2030, the U.S. is likely to be more self-sufficient in final assembly but still reliant on imports for upstream components “including cells, power electronics, transformers and processed materials,
China cell domination
U.S. battery cell manufacturing is expanding but views vary on whether it can meet domestic demand by the end of the decade.
Manufacturing projects include Canadian Solar’s new battery system and cell factory under development in Shelbyville, Kentucky. The facility is scheduled to be fully completed by mid-2026 for a total production capacity of 9 GWh/year. Elsewhere, American Battery Factory (ABF) is developing a battery cell plant in Tucson, Arizona with the first phase of production capacity due to supply 5.5 GWh/year by the end of 2027. ABF has already secured 4.5 GWh/year in offtake agreements.
Mulvihill warned, said:
Domestic manufacturing is scaling, but capacity buildout, ramp [up] timing, [tax credit] qualification, and upstream supply-chain constraints mean imports will likely remain important for some time,
While developers will continue to depend on imported cells, U.S. battery assembly capacity is set to grow rapidly from 69.4 GWh in 2025 to 235 GWh by 2030, according to Enverus.
China will continue to dominate cell production and other countries are “trying to onshore the [remaining] 60% of the battery value,” Dave Jones, chief analyst at research group Ember, told Reuters Events.
Automakers pivot
Conversions of electric vehicle cell production lines will help boost U.S. battery storage manufacturing in the coming years and they can typically be completed faster than greenfield factories.
Ultium Cells, owned by General Motors and battery group LG Energy Solution, plans to convert its Tennessee battery plant from electric vehicle to battery storage production, it said last month. LG Energy Solution has also signed a $4.3 billion supply deal with Tesla to supply LFP prismatic battery cells from LG’s plant in Lansing, Michigan from 2027 to power Tesla’s Megapack 3 energy storage systems.
Meanwhile, Ford announced plans to invest $2 billion to launch a new business unit that will produce lithium ion phosphate cells for data centers and wider grid benefits. Ford plans to repurpose an electric vehicle manufacturing facility in Glendale, Kentucky with the goal of producing at least 20 GWh annually by late 2027.
The Southeast and Midwest have attracted most new battery investment as manufacturers can build on established industrial infrastructure and supply chain networks, Mulvihill said.
He, noted:
Investors in these areas benefit from a mix of state incentives, available industrial sites, workforce access, logistics advantages, and proximity to existing auto and battery manufacturing hubs,
Greenfield factories will take time to reach full output as it could take one to two years for new facilities to reach planned production capacity and cell quality levels, Mulvihill noted.
Meanwhile, developers must also navigate global supply chain shortages for transformers, inverters, and other control and balance-of-system equipment that are impacting developers across the clean tech sector, he said.
Tariff risk
U.S. developers continue to face tariff uncertainty when deciding on battery suppliers.
On top of import tariffs, new federal rules from January 2026 require the proportion of project components imported from Foreign Entities of Concern (FEOC) including China to not exceed 50% to be eligible for tax credits. This threshold tightens to 15% by 2030 and companies are seeking more clarity on application of the rules including documentation requirements and component sourcing permutations.
Mulvihill said,
Market participants are still working through how some of those definitions will be interpreted in
For developers, there is uncertainty over how much U.S. manufacturing capacity will be FEOC compliant, Brian Pezzetti, VP Strategic Procurement, EDF power solutions North America, told Reuters Events.
Not all planned manufacturing capacity will come online and less than half could be supported by U.S. cell manufacturing, he said.
In February, the Supreme Court struck down import tariffs imposed by the Trump Administration under the International Emergency Economic Powers Act (IEEPA), reducing the cost of battery storage imports. The federal government could find a way of reintroducing similar charges and future costs are further complicated by expected changes to policies in supplier countries, including China’s battery VAT credit, Tony Song, Senior Vice President of Engineering, Procurement and Construction at developer GridStor, told Reuters Events. Beijing reduced the 9% VAT rebate on battery storage exports to 6% on April 1 and will lift it completely from January 2027.
Song said,
A major challenge for buyers and sellers of battery products is agreeing “on whether and how to share tariff risk,
–Editing by Robin Sayles
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Automakers expand US battery storage supply but China still key, source
