China's Strategic Grip on the EV Battery Supply Chain: A Pathway to Outsize Returns

The global energy transition is accelerating, but one nation has positioned itself as the linchpin of this transformation: China. By 2025, Chinese firms control critical bottlenecks in the EV battery supply chain—from raw material extraction to gigafactory production—creating a near-monopoly that will drive outsized returns for investors. As EV adoption surges, the strategic exposure of Chinese companies to lithium, cobalt, and manufacturing infrastructure ensures they will dominate the next decade of energy innovation.

Strategic Control of Upstream Materials: Lithium and Cobalt

China's dominance in battery minerals is not accidental but the result of decades of calculated investments. In the lithium sector, Chinese firms control 25% of global mining capacity, with significant stakes in Argentina's lithium triangle (home to 50% of the world's reserves) and Australia's Greenbushes mine. Ganfeng Lithium, for instance, operates the Mariana project in Argentina, producing 20,000 metric tons of lithium chloride annually. Meanwhile, Tianqi Lithium's 49% stake in Chile's SQM and its Australian hard-rock operations ensure a steady supply of lithium hydroxide, a key input for high-energy-density batteries.

In cobalt, China's grip is even tighter. The Democratic Republic of Congo (DRC), which produces over 70% of the world's cobalt, is effectively a Chinese economic zone. Chinese firms own 80% of DRC's cobalt production, with companies like Zhejiang Huayou and CMOC Group operating mines and processing facilities. This control is critical: cobalt is essential for NMC (Nickel-Manganese-Cobalt) batteries, which power high-performance EVs. By 2025, Chinese companies accounted for 67% of global cobalt processing capacity, ensuring they dictate pricing and supply stability.

Gigafactory Expansion: Scaling at Unprecedented Speed

China's battery manufacturers are not just securing raw materials—they are building the infrastructure to turn them into products. In 2025, Chinese firms accounted for 70% of global battery production capacity, with projects like CATL's Fuding Times gigafactory setting new benchmarks. The facility, which achieved 25 GWh of annual capacity in just 131 days, exemplifies the “Ningde Speed” that has made China the world's factory for EV batteries.

CATL and BYD, the industry's twin titans, have leveraged this scale to dominate global supply chains. CATL's CTP 3.0 technology increases energy density by 15%, while BYD's Blade Battery design eliminates traditional modules, reducing weight and cost. Together, they produced 199 GWh in H1 2025, outpacing the combined output of all other countries.

International expansion is accelerating. Envision Group's 10 GWh AESC plant in France and CATL's European gigafactory in Germany are part of a broader push into Europe, where local producers struggle with high costs and regulatory hurdles. These projects are not just about manufacturing—they're about securing access to European automakers like Renault and BMW, which rely on Chinese batteries to meet EV quotas.

Strategic Partnerships and Geopolitical Leverage

Chinese firms are also building ecosystems that lock in long-term partnerships. CATL's collaboration with Tesla's Shanghai factory and Toyota's joint ventures in battery recycling illustrate how these companies are embedding themselves into global value chains. Meanwhile, BYD's vertical integration—from mining to vehicle assembly—creates a self-sustaining loop that minimizes exposure to supply shocks.

The geopolitical stakes are rising. As the U.S. and EU scramble to build domestic battery industries, they face a stark reality: Chinese firms have already achieved economies of scale. For example, the cost of LFP batteries has fallen to $98/kWh in 2025, an 18% drop since 2022, thanks to Chinese-led efficiency gains. This pricing power gives Chinese companies leverage in negotiations with Western automakers, who must choose between higher costs and reliance on Chinese supply chains.

Investment Thesis: Capturing the Supply Chain Bottleneck

For investors, the key is to target firms that control both raw materials and manufacturing infrastructure. Here are three high-conviction plays:

1. Contemporary Amperex Technology Co. (CATL): The global leader in NMC and LFP batteries, with a 43% market share. Its CTP 3.0 technology and European expansion position it to capture 30% of the EU's battery market by 2030.
2. Build Your Dreams (BYD): A vertically integrated powerhouse with a 23.5% market share. Its Blade Battery dominance in China and partnerships with SAIC and Geely ensure steady growth.
3. Ganfeng Lithium: A critical player in lithium extraction and processing, with stakes in Argentina, Australia, and Mexico. Its 51% ownership of the Caucharí-Olaroz project ensures a steady supply for its downstream battery clients.

Conclusion: The New Energy Empire

China's control over the EV battery supply chain is not a temporary advantage—it's a structural shift. As the world races to decarbonize, the firms that own the raw materials and manufacturing infrastructure will reap the lion's share of profits. For investors, the time to act is now. Chinese battery leaders are already outpacing global competitors, and with sector consolidation and geopolitical tensions rising, their dominance will only deepen.

Invest in the bottleneck, not the bottleneck itself. The future of energy belongs to those who control the supply chain—and China's firms are leading the charge.