The U.S. Battery Industry's Next Phase: Lessons and Opportunities for Eurasian Supply Chains

Executive Summary

The global battery industry is at a critical inflection point. After reaching a historic high of 1 terawatt-hour (TWh) in 2024, demand for rechargeable chemical batteries could more than quadruple from 2023 levels by 2030, creating a value chain potentially worth over $400 billion. The United States has expanded its battery manufacturing footprint significantly, but progress has been uneven across the value chain. Midstream and upstream segments, particularly critical mineral processing and component production, remain dependent on global supply chains, with China maintaining a dominant position.

For Eurasia—spanning the European Union, Central Asia, the Caucasus, and Türkiye—these dynamics present both strategic risks and opportunities. As Washington recalibrates its approach between domestic industrial capacity, allied coordination, and innovation-led scaling, Eurasian countries and companies can position themselves as critical partners in the race to build resilient battery supply chains. This article examines the state of the U.S. battery industry, its policy considerations, and the strategic implications for Eurasian economies, industrial development, and cross-border investment.

Introduction

Batteries have moved from a niche input to a foundational technology for modern economies. They underpin electric mobility, grid stability, and increasingly defense systems. The expansion of lithium-ion chemistry has transformed the industry: its share of total U.S. battery production rose from roughly 10 percent in 2013 to nearly 90 percent by 2022. But the industry is now entering a new phase, shaped by evolving market conditions, policy shifts, and geopolitical competition.

The CSIS report, "A New Phase for the U.S. Battery Industry," provides a detailed evidence-based assessment of the sector's strengths, vulnerabilities, and forward path. It identifies three central strategic questions: where are the most critical supply chain vulnerabilities, how should international linkages be managed, and how can innovation be aligned with industrialization? While the report is U.S.-centric, its findings travel well beyond American borders. For EurasiaBizMonitor readers, the strategic choices made in Washington and allied capitals will directly affect supply chain configurations, investment flows, and industrial competitiveness across the Eurasian region.

Main Analysis

The U.S. Buildout and Its Structural Gaps

The U.S. battery sector has seen substantial investment in recent years, seeding manufacturing clusters across multiple regions and strengthening employment. Downstream assembly and cell manufacturing have grown faster than midstream segments such as cathode and anode materials, foils, and separators. Upstream, limited domestic reserves and processing capacity for key minerals make full self-sufficiency unlikely in the near term. This reliance on global supply chains is not a market failure but a structural reality shared by most economies, including those in Eurasia.

The report highlights that allied partners have been central to recent U.S. capacity expansion as investors, operators, suppliers, and customers. This international dimension underscores a broader point: no single country—including the United States—can command all nodes of the battery value chain. The question is how to manage exposure to concentrated suppliers, particularly China, while preserving the benefits of scale, specialization, and technological diffusion.

Policy Recalibrations and Market Realities

The CSIS report offers three observations for policymakers. First, policy measures to cultivate domestic industrial capacity should be grounded in market realities across the value chain; a coordinated strategy is essential to sustain enabling conditions. Second, de-risking strategies should manage exposure while preserving the benefits of scale, specialization, and diffusion; indiscriminate decoupling can be counterproductive. Third, innovation and industrialization are distinct but complementary policy domains that require careful alignment.

These observations have direct resonance in Eurasia. The European Union has pursued its own battery value chain strategy, aiming to build gigafactories and secure raw materials through trade agreements and strategic partnerships. Central Asian nations, including Kazakhstan and Uzbekistan, hold significant reserves of critical minerals and have sought to attract foreign investment in mining and processing. Türkiye has positioned itself as a manufacturing hub with access to European markets. The new U.S. phase, with its emphasis on allied coordination and supply chain resilience, creates space for these countries to deepen their integration into Western battery networks.

Business Impact

For businesses operating in Eurasia, the U.S. battery industry's recalibration has near-term and structural implications.

• Supply chain diversification: Companies that have relied on a single source for battery components may need to re-evaluate their supplier networks. The push for allied coordination could create preferential access for firms based in partner countries, benefiting Eurasian suppliers with transparent governance and reliable logistics.
• Investment opportunities: U.S. and European companies seeking to de-risk will likely look to expand sourcing from geographies outside China. Central Asia's mineral wealth and the Caucasus's energy resources could attract new FDI in mining, processing, and logistics.
• Industrial strategy: Eurasian manufacturers, particularly in Eastern Europe and Central Europe, may have opportunities to participate in midstream processing and component production. The growth of the battery market implies rising demand for specialized inputs, and regional industrial policy can be aligned to capture these segments.
• Innovation and skills: The alignment of innovation with industrialization suggests that government support for research and development should be paired with attention to manufacturing capabilities. Eurasian technology hubs can play a role in niche innovations, especially in materials science and recycling technologies.

Regional Perspective

The battery value chain is becoming a strategic arena for regional cooperation across Eurasia.

• European Union: The EU is both a competitor and a partner to the United States in the battery race. Its own regulatory frameworks, such as the Net-Zero Industry Act and the Critical Raw Materials Act, aim to increase domestic processing capacity while diversifying imports. The U.S. approach to allied coordination could align with EU efforts to build a transatlantic battery market, reducing shared vulnerabilities.
• Central Asia and the Caucasus: These regions are increasingly important as upstream suppliers. Kazakhstan is a major producer of lithium, and Azerbaijan has invested in industrial zones that could support battery-related manufacturing. However, infrastructure and logistics remain constraints. Regional connectivity initiatives, including the Middle Corridor, could improve access to European markets and reduce transit times.
• Türkiye: As a bridge between Europe and Asia, Türkiye has leveraged its customs union and manufacturing base to attract automotive and electronics investments. Expanding battery production in Türkiye could serve both domestic and European demand.
• Eastern Europe and the Western Balkans: These areas are emerging as low-cost manufacturing destinations for the EU. The U.S. focus on allied supply chains may encourage European firms to source from this region, further integrating it into the European battery ecosystem.

Future Outlook

Over the next 3–5 years, several developments are likely to shape the intersection of the U.S. battery industry and Eurasian markets.

• Continued demand growth: As electric vehicle adoption accelerates and grid storage expands, battery demand will remain robust. This will sustain investment signals for mining and processing projects. Governments across Eurasia will likely renew efforts to attract foreign direct investment in extractive industries, with attention to environmental and social governance standards.
• Refined trade policies: The United States and the EU may tighten rules on supply chain transparency and forced labor, making compliance a prerequisite for market access. Eurasian suppliers that can demonstrate traceability and sustainability will gain competitive advantage.
• New logistics corridors: Investments in the Trans-Caspian International Transport Route (Middle Corridor) and other east-west corridors are expected to reduce freight times and costs. This will facilitate the movement of minerals, materials, and finished cells between Asia, the Caucasus, and Europe.
• Advances in innovation: Solid-state batteries, sodium-ion chemistry, and recycling technologies could alter the value chain map. Eurasia's research institutions and startups may find niches in these emerging fields, but access to scale-up capital remains a challenge.
• Strategic alignment: The depth of U.S.-EU cooperation on batteries will determine how quickly a transatlantic market emerges. If policy differences are harmonized, Eurasia could become a shared hinterland for battery materials and production.

Conclusion

The U.S. battery industry is entering a new phase characterized by deliberate public policy, supply chain resilience, and international coordination. The strategic choices made in Washington, Brussels, and other capitals will resonate across Eurasia. For regional businesses, investors, and policymakers, the imperative is clear: understand the shifting drivers of the global battery value chain, identify where Eurasia's comparative advantages lie, and act to integrate them into emerging supply networks.

The opportunities are considerable, but so are the competitive and geopolitical risks. Success will require not only attracting investment but also building the institutional capacity, infrastructure, and partnerships that enable deep participation in a complex, rapidly evolving industry.

Key Takeaways

• Global battery demand reached 1 TWh in 2024 and could quadruple by 2030, creating a $400 billion market opportunity.
• The U.S. is expanding battery manufacturing but retains structural gaps in midstream and upstream segments, mirroring challenges across many Eurasian economies.
• Allied supply chain coordination is a central policy theme; Eurasian countries can become preferred partners in the Western battery ecosystem.
• De-risking strategies should focus on managing exposure to concentrated suppliers while retaining the benefits of global scale and specialization.
• Eurasia's competitiveness will depend on logistics infrastructure, policy alignment with the EU and US, and the ability to offer traceable, sustainable inputs.

Sources

• A New Phase for the U.S. Battery Industry - CSIS

Note: All figures and factual claims are drawn from the referenced source.