China leads battery production but risks losing the solid-state battery race

China is not falling behind in the battery race. On the contrary, the country still controls much of the industrial supply chain powering electric cars sold worldwide.

According to the International Energy Agency, China accounted for more than 80% of global battery cell production in 2025, while also leading the manufacture of the active materials used in electric vehicle batteries.

That dominance is underpinned by giants such as CATL, BYD and CALB, as well as a vast industrial network and an enormous domestic market. However, a warning now emerging from China itself suggests that the country may retain its lead in mass battery production while risking the loss of part of its technological advantage in solid-state battery development.

A report cited by the Chinese media warns that, despite its leadership in scientific output and patent volumes, China may be unable to achieve the same dominance in manufacturing solid-state batteries. The reason lies in the nature of the technology itself: this is not simply another step forward from existing batteries. It is a different race, involving other materials, new industrial processes and far fiercer competition over intellectual property.

Solid-state batteries operate under different rules

Solid-state batteries replace the liquid electrolyte found in today’s batteries with a solid material. In theory, this change could deliver higher energy density, improved thermal safety, faster charging and more compact batteries. In short, it offers everything the automotive industry wants to make electric vehicles more appealing.

In practice, however, they are a major headache. The technology remains difficult to industrialise, facing challenges including material stability, durability, dendrite formation, the moisture sensitivity of certain electrolytes, material costs and the ability to manufacture millions of cells with consistent quality - yes, it sounds as though we are speaking Chinese. Jokes aside, Auto Talks explains what dendrites are and some of these drawbacks:

Put simply, producing millions of LFP (Lithium Iron Phosphate) or NMC (Nickel, Manganese and Cobalt) lithium-ion cells with high industrial efficiency is one thing. Mastering a technology that is only just moving beyond the prototype phase, and relies on entirely different chemical interfaces and production methods, is quite another. China’s scale remains an enormous advantage, but in this race it may not be enough.

The most important patents are outside China

China holds around 35% of patents connected to solid-state batteries and roughly 39% of patents relating to electrolytes. Its scientific output has expanded sharply, rising from 21 papers in 2015 to 562 in 2023. These figures clearly demonstrate strength, but they do not tell the whole story.

The picture changes when the concentration of the most significant patents is examined. Of the 30 leading global organisations for solid-state battery and electrolyte patents, 17 are Japanese, seven are Chinese, five are South Korean and only one is European. No Chinese organisation appears in the Top 10.

This does not mean Chinese companies will be shut out. They can create their own solutions, work around patents through alternative processes, license technology or challenge existing registrations. Even so, intellectual property carries increasing weight when a technology moves from the laboratory into global contracts with car manufacturers.

Is this Toyota’s moment for solid-state batteries?

Toyota is the name to watch most closely in this context. The Japanese brand has worked on solid-state batteries for years and has strengthened partnerships in materials, one of the decisive areas for turning this promise into a production reality. The company currently accounts for 40% of global solid-state battery patents.

Idemitsu Kosan is developing lithium sulphide to support Toyota’s plans, with a new facility in Japan scheduled for June 2027. According to Reuters, the investment is expected to be around ¥21.3 billion (approximately €114.9 million at the current exchange rate), with annual capacity sufficient for 50,000 to 60,000 electric vehicles.

In South Korea, companies including Samsung SDI, LG Energy Solution and SK On are also competing in this race. South Korea’s advantage lies in its accumulated manufacturing experience with high-energy-density cells and its relationships with global car manufacturers.

Europe will remain dependent

For Europe, this potential reshaping is uncomfortable. The European automotive industry already relies heavily on Asia for batteries and has yet to turn its industrial ambition into a supply chain comparable with those of China, Japan or South Korea.

According to the International Energy Agency, almost all battery cells used globally are supplied by companies based in China, South Korea or Japan. In addition, the number of Chinese producers in the European Union has almost doubled since 2023.

If China retains its advantage in high-volume batteries while Japan and South Korea gain ground in solid-state technology, Europe’s strategic room for manoeuvre will remain limited, regardless of the industrial plans Brussels is able to mobilise.