China’s dominance of the electric-vehicle battery industry is becoming increasingly difficult for rivals to ignore. During the first seven months of 2026, CATL and BYD together supplied 54.6% of the batteries installed in electric, plug-in hybrid and hybrid vehicles tracked globally, according to SNE Research. CATL alone approached a 40% share.
The numbers reveal a widening industrial divide. China has built not only enormous battery factories, but also much of the supply chain that feeds them, from cathode materials to graphite anodes. North America is adding factories and billions of dollars in investment, including new production in Canada, yet much of the underlying technology and manufacturing expertise remains concentrated with Asian companies. As battery costs increasingly determine which electric vehicles can compete on price, that imbalance has become an automotive, trade and industrial-policy challenge at the same time.
CATL and BYD Have More Than Half the Global Market
From January through July 2026, approximately 725.2 gigawatt-hours of batteries were installed in electric, plug-in hybrid and hybrid vehicles registered across the markets monitored by SNE Research. That was 20.4% more than during the same period of 2025. CATL supplied 289.6 GWh, giving the Chinese battery giant a remarkable 39.9% global share.
BYD remained firmly in second place with 106.7 GWh and 14.7% of the market. Combined, CATL and BYD therefore controlled 54.6%. Interestingly, their combined position was actually slightly lower than the 54.9% recorded a year earlier. The difference is happening inside the Chinese duopoly: CATL is gaining ground rapidly while BYD’s share has slipped. Even so, having more than half of a global strategic industry concentrated in two companies from one country gives China enormous influence over battery technology, production economics and the future cost structure of electric vehicles.
CATL Is Pulling Away Even From BYD
The headline number masks a striking divergence between China’s two largest battery companies. CATL’s battery deployment increased 26.6% year over year during the first seven months of 2026, significantly faster than the global market’s 20.4% expansion. Its share consequently climbed from 38% to 39.9%, putting the company within touching distance of controlling two-fifths of worldwide EV-battery usage by itself.
BYD’s battery deployment increased only 4.7% to 106.7 GWh. Its market share dropped from 16.9% to 14.7%. One reason is structural: BYD is both a battery manufacturer and an automaker, meaning a substantial part of its battery demand is connected directly to sales of its own vehicles. SNE Research linked the slower battery growth partly to softer Chinese sales momentum. BYD is increasingly looking overseas for expansion, however, with its vehicles now sold across more than 120 countries and regions and exports becoming much more important to the company’s growth.
China’s Advantage Extends Far Beyond Two Companies
CATL and BYD attract most of the attention, but China’s battery industry is considerably deeper. Seven Chinese manufacturers appeared among SNE Research’s global top 10 suppliers for January through July. Together, those companies controlled 72.8% of the market, up 3.1 percentage points from a year earlier.
The challengers behind CATL and BYD are growing quickly. CALB supplied 37.3 GWh, an increase of 34.3%. Gotion reached 34 GWh after expanding 44.2%, while EVE grew 53.1% to 25 GWh. REPT, which entered the global top 10, more than doubled its deployment to 16.9 GWh. The pattern reflects an ecosystem rather than the success of one or two national champions. The International Energy Agency estimates that China produced more than 80% of the world’s battery cells in 2025. It also accounted for roughly 85% of cathode active-material production and more than 90% of anode active-material production used in EV batteries.
LFP Batteries Have Become a Powerful Chinese Cost Advantage
Chemistry is a major part of China’s battery advantage. Lithium iron phosphate, or LFP, has rapidly moved from being considered a lower-cost alternative to becoming the world’s dominant EV-battery chemistry. The IEA estimates LFP batteries represented more than 55% of global EV-battery deployment in 2025, compared with nearly half one year earlier.
That shift matters because China possesses enormous LFP manufacturing scale and expertise. LFP avoids nickel and cobalt and typically costs substantially less than nickel-based alternatives. According to the IEA, average LFP battery packs were more than 40% cheaper per kilowatt-hour than NMC packs in 2025, although differences in applications contribute to that gap. Overall battery-pack prices in China were about 30% below North American prices. BYD’s Blade Battery is based on LFP chemistry, while CATL has made LFP central to products and overseas projects. Lower battery costs can translate directly into more affordable EVs, making the manufacturing advantage difficult for competitors to neutralize quickly.
North America Has Factories, but China Still Has the Scale
North America has not stood still. Battery plants have been built or announced across the United States and Canada, often through partnerships involving established Asian manufacturers. Yet the global production numbers remain heavily skewed toward China. By the end of 2025, worldwide lithium-ion battery manufacturing capacity exceeded 4 terawatt-hours, according to the IEA.
More than 80% of that capacity was located in China. The United States accounted for only around 6% to 7%, roughly comparable with the European Union. American capacity has been expanding quickly, but building a factory is different from immediately operating it at competitive scale. The IEA notes that new battery facilities can take more than five years to approach nominal production levels. It also estimates that North American-headquartered companies owned more than 35% of U.S. nameplate capacity when Asian-controlled joint ventures are excluded, yet those companies supplied only about 3% of the batteries installed in EVs in 2025. Manufacturing experience remains a formidable barrier.
Korean and Japanese Battery Giants Are Losing Relative Ground
North America’s battery buildout relies heavily on companies from South Korea and Japan, but even those established manufacturers are being squeezed by the speed of Chinese expansion. LG Energy Solution remained the world’s third-largest battery supplier during the first seven months of 2026, supplying 60.3 GWh to customers that include Tesla, General Motors, Hyundai, Volkswagen and other major automakers.
Its deployment increased 4.5%, but its market share fell from 9.6% to 8.3% because the overall market grew much faster. Panasonic supplied 26.2 GWh and held 3.6%, while SK On fell 9.8% to 22.3 GWh and a 3.1% share. SNE Research connected some of that weakness to automakers adjusting electric-vehicle production plans in North America and Europe. That creates an awkward position for the region: many new North American plants depend on Korean and Japanese battery expertise at the same moment those companies themselves are losing global share to faster-growing Chinese rivals.
Canada Is Finally Producing Batteries at Commercial Scale
Canada’s battery ambitions are becoming tangible rather than purely promotional. NextStar Energy, the Stellantis-LG Energy Solution venture in Windsor, Ontario, began commercial battery-cell production in November 2025. By February 2026, the operation had already produced its one-millionth cell and employed more than 1,300 people after more than C$5 billion had been invested in the facility.
The operation continued expanding in June when NextStar began production on a battery-pack line, adding pack manufacturing to existing cell and module operations. Canada is also trying to build the less visible pieces surrounding cell production. In July, Ottawa committed up to C$70 million toward Volta Energy Solutions Canada’s C$760.9-million copper-foil project in Granby, Quebec. The facility is expected to begin with annual capacity of 25,000 tonnes in 2027. Those projects strengthen Canada’s position, but they are entering an industry in which Chinese suppliers already possess decades of accumulated scale and deeply integrated domestic supply networks.
Chinese Battery Technology Is Increasingly Moving Overseas
China’s battery advantage is no longer confined to factories inside China. CATL is increasingly embedding itself directly in foreign automotive supply chains. Its joint venture with Stellantis in Zaragoza, Spain, is designed to produce LFP batteries for European vehicles, with investment of up to €4.1 billion and potential capacity of as much as 50 GWh.
The project illustrates a challenge for governments seeking to reduce dependence on China: localizing battery production does not necessarily mean localizing battery ownership, technology or expertise. CATL’s international partnerships allow automakers to obtain proven technology while avoiding the long process of building equivalent capabilities from scratch. BYD is globalizing through a different route, combining battery production with its rapidly expanding vehicle business. Its new-energy vehicles had reached more than 120 countries and regions by April 2026. In August, BYD’s overseas vehicle shipments jumped 134.5% year over year to 189,466 units, increasing the international footprint of its vertically integrated battery technology as well.
The Cost Gap Could Be More Important Than the Capacity Gap
Battery manufacturing is ultimately a competition over economics as much as factory count. The IEA found that battery-pack prices in China were approximately 30% lower than in North America during 2025 and about 35% lower than in Europe. Those differences can represent thousands of dollars on a vehicle carrying a large battery pack.
China’s intense domestic competition has pushed manufacturers toward greater efficiency, tighter supply-chain integration and faster technological change. There are risks to that model: low prices have squeezed margins, and the IEA warns that some LFP cathode producers are operating at a loss. Still, inexpensive batteries give Chinese automakers considerable room to lower vehicle prices. In China, around 70% of battery-electric cars sold in 2025 were already cheaper than the average conventional car. The U.S. market looked very different, with electric vehicles remaining below 10% of total vehicle sales. For North America, matching China therefore requires competitive production costs, not simply constructing more gigafactories.
Catching China Will Require an Entire Supply Chain
The numbers suggest there is no single factory or subsidy capable of quickly closing the battery gap. China’s advantage reaches from raw-material processing and cathode production through cell manufacturing, battery engineering and vehicle assembly. The country accounted for about 70% of global electric-car production in 2025 in addition to more than 80% of battery-cell production.
North America is investing in many of those pieces, and its battery manufacturing capacity has been expanding faster in percentage terms than China’s. But the starting point is far smaller, and many plants still depend on Asian partners for technology, machinery or materials. The IEA expects China to remain the world’s largest producer of batteries and battery materials through 2035 under stated government policies. CATL and BYD’s current 54.6% share therefore represents more than a temporary ranking. It is the result of an industrial ecosystem built at enormous scale. Closing that gap will require North America to develop competitive materials, technology, production expertise and demand simultaneously.
