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The price of batteries could surge, with some component prices doubling, if the U.S. imposes an additional hefty tariff on U.S. imports of graphite from China that the American battery material makers seek, industry analysts say.
Energy storage and EV batteries could see costs in the U.S. more than double with an escalation of the trade wars in critical minerals, per a report by investment bank Roth Capital Partners cited by the South China Morning Post.
This report followed last week’s call by the American Active Anode Material Producers (AAAMP), a coalition of American graphite producers, who submitted a petition to the Department of Commerce and International Trade Commission (ITC) to initiate a trade investigation and impose tariffs as high as 920% on imports of natural and synthetic graphite from China used to make lithium-ion battery anode material.
“AAAMP is filing this case to help protect the North American graphite industry, which is at risk of being smothered by China’s malicious trade practices,” Erik Olson, spokesperson for the U.S. coalition, said.
“Without trade relief from the U.S. government, the domestic graphite industry is in peril,” Olson added.
“China’s anticompetitive actions make it challenging for graphite producers to find secure financial footing, which prevents them from becoming established players in the global market.”
The current 25% tariff on most graphite imports from China – the world’s dominant supplier of the battery material – “is far too low,” the coalition says.
AAAMP petitioned for the investigation under the U.S. antidumping and countervailing duty (AD/CVD) statutes, asking authorities to “assess additional tariffs equal to the extent of unfair pricing by the Chinese.” The coalition’s experts and legal representation have estimated that the appropriate anti-dumping tariffs on graphite from China should be as high as 920%.
Tariffs could protect U.S. graphite makers, but the current state of affairs in the global graphite market is such that China holds 93% of the world’s battery-grade graphite supply, per estimates by the International Energy Agency (IEA). The United States holds just 1% of this market, according to the IEA.
In the global graphite market, the geopolitical risk is very high as demand would be 10 times higher than supply outside of the top producer (China) in 2030, the agency notes.
The U.S.-China trade tensions have escalated since the election of Donald Trump. The President-elect has threatened additional tariffs on China, while Beijing has banned exports of the critical minerals gallium, germanium, and antimony to the U.S., with stricter restrictions on end-usage for graphite materials exported to America.
A 920% tariff on imports of graphite from China for making battery anodes could more than double the cost of the anode part of the batteries, Roth Capital Partners says.
“We estimate the incremental cost could be about US$135 per kWh, representing a 125 per cent increase in the DC-block to around US$255 per kWh,” Justin Clare, managing director at the investment bank, said, as carried by the South China Morning Post.
The cost of the anode typically accounts for up to 15% of the cost of an entire battery, Clare noted.
Higher battery costs due to increased tariffs on graphite materials for the anode part could slow the decline in costs and push further down the road the coveted average global battery price of $100 per kilowatt-hour (kWh). This has been considered the threshold below which electric vehicles would achieve price parity with conventional cars running on gasoline.
Meanwhile, the U.S. is seeking to increase its domestic supply of graphite.
Australia-based Novonix has just announced a conditional commitment from the U.S. Department of Energy for a loan of up to US$754.8 million to partially finance a proposed new facility in Chattanooga, Tennessee, that would manufacture synthetic graphite
