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An employee works on the production line of a lithium-ion battery factory on November 14, 2020 in Huaibei, Anhui Province of China. (Wan Shanchao/VCG via Getty Images)
From electric vehicles to high-tech weaponry, advanced batteries are vital to America's economic and military competitiveness—yet China dominates the entire battery supply chain. How can the U.S. and its allies build resilient supply chains beyond the reach of our adversaries?
In a new report, Hudson experts examine the race for advanced batteries and the national security risks posed by China's dominance of the global battery supply chain. Authors Nadia Schadlow, Arthur Herman, and Brayden Helwig offer a four-part national strategy to establish an agile and innovative production base for these critical technologies. Watch their discussion of the new report or read excerpts below.
Key Quotes
Excerpts from the new report, Powering Innovation: A Strategic Approach to America’s Advanced Battery Technology
1. Energy Supply Chains Are a Major Vulnerability for the US Military
Over the past decade, policymakers have shifted their attention from the Middle East toward East Asia. Although the geopolitical environment has changed, the energy supply chain remains a major source of vulnerability for the U.S. military. Unfavorable geography in the Pacific means that resupplying U.S. forces during a conflict would be both complicated and dangerous. Department of Defense (DOD) officials sometimes refer to this challenge as the “tyranny of distance.”
To solve these dilemmas, DOD strategists are developing operational concepts for completing missions in decentralized, more agile formations that can operate far from supply lines. The U.S. military’s shift toward distributed operations—coupled with operational and strategic demands for stealthier vehicles, survivable unmanned systems, electromagnetic warfare-enabled information dominance, and additional satellites—mean that DOD must prioritize continued development and access to advanced batteries.
2. China's Weaponization of the World's Critical Mineral Supply
The United States controls only a tiny fraction of the advanced battery supply chain. China dominates much of the mining and processing of critical minerals as well as cell manufacturing and battery assembly. These bottlenecks grant Beijing significant strategic leverage: given the Chinese Communist Party's (CCP) penchant for economic coercion, it is not difficult to imagine how China could weaponize the battery supply chain against the United States.
The case of rare earths is just one example of the CCP’s exercise of economic coercion to achieve its strategic goals. In 2019, Beijing issued veiled threats that it may cut off rare earths supplies to the United States if the Trump administration continued to clamp down on Chinese high technology. These threats have grown even more acute under the Biden administration: in spring 2021, Beijing threatened again to cut off rare earths imports to the United States. China’s consolidation of the advanced battery supply chain grants the CCP ample leverage should it continue this strategy.
3. Four Steps to Secure America's Energy Supply Chain
U.S. policymakers should adopt a four-part strategy to create a secure, domestic-oriented supply chain for advanced batteries:
- First, the United States should use available policy tools to make investments in mining, processing, and battery production, as well as battery recycling.
- Second, policymakers should deploy tools that drive innovation in substitutes for Chinese-controlled critical minerals, next-generation battery technologies, and manufacturing techniques for lithium-ion batteries in order to leapfrog Chinese suppliers.
- Third, the Pentagon should undertake a full review of its battery supply chain with an eye toward using DOD-specific policy tools that strengthen the industrial base for military batteries.
- Fourth, the U.S. government should invest in workforce development and talent programs across the supply chain.
Quotes have been edited for length and clarity.
Go Deeper
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A Good Battery Is the Best Defense Against a Military Assault As adversaries make it harder for U.S. forces to operate across long distances, the energy provided by advanced batteries can help the Pentagon achieve its missions, Nadia Schadlow and Arthur Herman write in The Wall Street Journal. However, the U.S. lacks an innovation and production base needed for advanced battery technology. To reshore this key part of America’s defense innovation base, the Department of Defense must work closely with battery manufacturers, the U.S. Department of Energy, and other public and private sector partners. |
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The Impact of COVID-19 on Vulnerable Mineral Supply Chains The COVID-19 pandemic has exposed the growing vulnerability of America's industrial supply chain to shortages of critical mineral resources. In a recent report, Thomas Duesterberg examines America's dependence on China for raw materials, and Beijing's efforts to acquire mining assets in Central Asia, Africa, South America and Australia. |
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Xi Jinping’s Two-Track Foreign Policy In a major speech last week, Xi Jinping left no doubt about his commitment to the incorporation of Taiwan into China, writes Walter Russell Mead in The Wall Street Journal. But to keep the economy running, China must work with its neighbors and not against them. Beijing can threaten and insult Australia, but when China's power stations across the Chinese Rust Belt run out of fuel, they'll need Australian coal to keep the lights on. From Beijing’s point of view, this would be a terrible time for a major Taiwan crisis. |
