Geopolitical and Labor Risks in the U.S. Battery Supply Chain: Strategic Investment Considerations for 2025

The U.S. battery supply chain, a cornerstone of the global transition to electric vehicles (EVs), faces mounting challenges from geopolitical instability and labor risks. As the Biden administration accelerates its push for domestic manufacturing under the Inflation Reduction Act, investors must grapple with vulnerabilities in material sourcing, trade tensions, and ethical labor practices. This analysis examines the interplay of these risks and their implications for supply chain resilience and investment strategies.

Geopolitical Risks: Fragile Dependencies and Trade Tensions

The U.S. battery supply chain remains heavily exposed to foreign material dependencies. Russia's control of nearly 20% of global high-grade nickel—a critical component for EV batteries—creates a vulnerability amid ongoing geopolitical tensionsBattery Supply Chain Disruptions: How Material Shortages ...^[1]. Similarly, the Democratic Republic of the Congo (DRC) supplies over 60% of the world's cobalt, a material essential for battery cathodes, exposing the industry to political instability and human rights concerns in the regionBattery Supply Chain Disruptions: How Material Shortages ...^[1].

China's dominance further exacerbates these risks. In late 2023, Beijing imposed export restrictions on graphite, a key anode material, disrupting 35% of global EV productionBattery Supply Chain Disruptions: How Material Shortages ...^[1]. The U.S. Commerce Department's 2025 provisional anti-dumping tariff of 93.5% on Chinese anode-grade graphite—aimed at reducing reliance on Chinese suppliers—has instead raised costs for American manufacturers, with annual imports valued at $347 million now under threatBattery Supply Chain Disruptions: How Material Shortages ...^[1]. China's control of 80% of global lithium hydroxide refining and 6–25% of core lithium technologies underscores its strategic leverage over the supply chainBattery Supply Chain Disruptions: How Material Shortages ...^[1]China's Battery Control Risks US Future^[3].

These dependencies are compounded by trade tensions. China's retaliatory export controls on graphite and other minerals have created a feedback loop of scarcity and volatility, forcing U.S. firms to accelerate domestic production and partner with allies like Canada and AustraliaBattery Supply Chain Disruptions: How Material Shortages ...^[1]. However, analysts warn that such transitions will take years to materializeBattery Supply Chain Disruptions: How Material Shortages ...^[1].

Labor Risks: Forced Labor and Workforce Shortages

Beyond geopolitical risks, labor challenges threaten the ethical and operational integrity of the U.S. battery supply chain. A 2025 report by AI supply chain risk platform Infyos revealed that 75% of the lithium-ion battery supply chain may involve forced labor, violating U.S. and EU laws such as the Uyghur Forced Labor Prevention ActBattery Supply Chain Disruptions: How Material Shortages ...^[1]. This raises significant compliance risks for investors, as non-compliance could lead to blocked market access and reputational damage.

Domestically, the U.S. faces acute labor shortages. A 2025 Center for Automotive Research (CAR) survey found that 82% of respondents reported a shortage of skilled workers in upstream battery production, including mining and refiningLabor shortages pose 'serious challenges' to US battery supply chain^[2]. These shortages are driven by geographic mismatches, competition for talent, and the difficulty of retaining skilled labor in a rapidly evolving industryLabor shortages pose 'serious challenges' to US battery supply chain^[2]. The FDD report further highlights China's strategic dominance in battery manufacturing as a threat to U.S. economic and national security, urging urgent action to build a resilient domestic workforceChina's Battery Control Risks US Future^[3].

Investment Implications: Building Resilience Through Diversification and Compliance

To mitigate these risks, investors must prioritize supply chain diversification and ethical compliance. Key strategies include:
1. Material Sourcing Diversification: Reducing reliance on single-source suppliers by investing in alternative materials (e.g., sodium-ion batteries) and securing partnerships with countries like Brazil and Indonesia for nickel and cobaltBattery Supply Chain Disruptions: How Material Shortages ...^[1].
2. Domestic Production and Recycling: Accelerating investments in U.S. refining and recycling infrastructure to reduce dependence on Chinese processing. The FDD report emphasizes that recycling could recover up to 95% of lithium and graphite, easing resource scarcityChina's Battery Control Risks US Future^[3].
3. Labor Risk Assessments: Implementing rigorous audits and transparency measures to ensure compliance with forced labor laws. This includes leveraging blockchain technology for traceability in raw material sourcingBattery Supply Chain Disruptions: How Material Shortages ...^[1].
4. Workforce Development: Partnering with educational institutions and vocational programs to address labor shortages, particularly in technical roles such as battery chemistry and refiningLabor shortages pose 'serious challenges' to US battery supply chain^[2].

Conclusion

The U.S. battery supply chain stands at a crossroads. While geopolitical and labor risks pose significant threats, they also present opportunities for innovation and strategic investment. By prioritizing diversification, ethical compliance, and workforce development, investors can build resilient supply chains that align with both economic and environmental goals. As the global EV market expands, the ability to navigate these challenges will determine not only the success of individual firms but the long-term viability of the clean energy transition.