US Mandates 55% Non-Chinese Sourcing for Grid Storage Batteries by 2026, Threatening Delays and Cost Hikes

September 20, 2026

daily.dev (technologyreview.com) USA

Overview

The United States has issued an executive order requiring new grid-scale energy storage projects to source 55% of material costs from non-Chinese entities by 2026 to qualify for tax credits, aiming to disentangle the US battery market from China. Analysts warn this mandate could lead to deployment delays, increased costs, and project cancellations. While domestic manufacturing capacity from players like LG Energy Solutions and Samsung SDI is expected to meet US demand by 2030, these solutions are projected to be more expensive than Chinese imports.

In Depth

Key Findings

The U.S. government has issued an executive order mandating that new grid-scale energy storage projects procure at least 55% of their material costs from non-Chinese sources by 2026 to qualify for tax credits. This move, aimed at reducing reliance on Chinese-made batteries, has prompted warnings from analysts about potential deployment delays, increased costs, and even project cancellations within the domestic market.

Technical / Clinical Details

The executive order is a strategic attempt to de-couple the U.S. battery supply chain from China’s significant global dominance. Specifically, to be eligible for federal tax credits starting in 2026, over 55% of the material costs for batteries used in grid-scale storage projects must originate from the U.S. or countries deemed reliable by the U.S. This directive impacts various stages of the battery supply chain, including raw material extraction, processing, and cell manufacturing. Currently, China holds a commanding share across the lithium-ion battery supply chain, exerting considerable influence from raw material sourcing to finished product assembly.

Background & Context

This policy stems from broader U.S. efforts to onshore critical supply chains due to geopolitical risks and economic security concerns. The Inflation Reduction Act (IRA) has already spurred over $110 billion in clean energy investments within its first year, with the domestic battery supply chain being a central focus. However, analysts caution that the new sourcing requirements could slow down battery deployment, elevate project costs, and potentially lead to the cancellation of some planned initiatives. In the short term, domestic battery manufacturing capabilities from companies such as LG Energy Solutions, Samsung SDI, Ford, and SK On are projected to grow and potentially meet U.S. demand by approximately 2030. Nevertheless, these domestic options are anticipated to be more expensive than imports from China, potentially passing on higher costs to consumers and businesses.

Strategic Significance & Outlook

The executive order represents a transformative shift for the U.S. battery market. In the long run, it could bolster the domestic battery supply chain and enhance energy security. However, the process will require overcoming significant challenges, including establishing a robust domestic manufacturing ecosystem, cultivating a skilled workforce, and securing a stable supply of critical raw materials. A combination of government incentives and private investment will be key to addressing these hurdles and enabling the U.S. to establish a competitive position in the global battery market. Concurrently, this policy may accelerate the restructuring of international supply chains and foster diverse battery technologies and sourcing partners.

Source: https://daily.dev/posts/can-the-us-battery-market-untangle-from-china–wxbls5vqq

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