How Will Trump Tariffs Impact Battery Prices?
Trump’s proposed tariffs, especially those imposed on Chinese imports, will have a significant impact on the cost of batteries. However, it doesn’t spell the end of the growth of clean tech. Let’s examine the many components of this equation.
According to the International Energy Agency (IEA), China produces around 85% of the world’s battery anodes, 70% of its cathodes, and 75% of its battery cells. Moreover, over half of the global processing of lithium, cobalt, and graphite, key minerals used in lithium-ion battery production, occurs in China.
Another IEA report, "Batteries and Secure Energy Transitions," found that China has 70 to 90% of the global battery market share (even higher if you exclude the military sector). The country dominates every stage of the value chain for current-generation lithium-ion battery technologies, from mineral extraction and processing to battery manufacturing.
The U.S. has imported around $4 billion worth of lithium-ion batteries from China during the first four months of 2024. If the 60% to 100% tariffs become a reality, they would add $2.4 to $4 billion to the cost, all else being equal.
But all else may not remain equal.
We've already seen shifts in the supply chain during the past month. Prices of some components have increased in anticipation of the impending tariffs, while the availability of materials has become more unpredictable.
Meanwhile, we can expect the new administration to be more hostile toward clean energy and climate actions. Any meaningful support for green technology on the federal level will be unlikely, and Trump may even rescind the remaining funding for the Inflation Reduction Act, Biden’s climate legislation. Subsidies will dwindle, and clean tech companies must make their business case to stay afloat.
However, not everything is doom and gloom.
The business case for green tech is improving, even without subsidies or government funding. For example, many red states are increasing their adoption of solar and wind power simply because renewables are cheaper. Texas — an oil and gas state — gets 40% of its total energy from carbon-free sources.
Yes, the cost of batteries will likely go up. However, companies can still make the business case work if they improve the cost efficiency of battery solutions to offset the increased material cost along with other technological advancements. And they must act quickly.
Here’s the challenge: We can’t change battery chemistry or overhaul the supply chain overnight. Most companies must work with the cells they source from their suppliers — you get what you get, and you don’t get upset. So, how do you improve a battery solution’s cost efficiency at the drop of a hat to adapt to market shifts?
How software-defined batteries improve cost efficiency and lower TCO
The Tanktwo Operations System (TBOS) allows you to turn any cell into software-defined batteries (SDBs), giving you more control over cell behaviors and operating parameters to lengthen battery lifespan and lower the total cost of ownership (TCO) with minimal disruption to your product design and manufacturing process.
SDBs built on TBOS offer granular control over cell behaviors. Our battery AI technology analyzes numerous data points and automates real-time adjustments based on predefined requirements to maximize performance and longevity.
The software monitors the state of health (SoH) of all cells in a battery pack in real time and predicts which one is faulty or at risk. It offers the ability to mix cells of different ages and chemistries, enabling operators to isolate and replace specific problematic cells instead of the entire battery pack to reduce wastage.
The ability to mix cells also means that you can change suppliers at any time without impacting operations, mitigating supply chain challenges that may worsen as the world’s geo-political situation becomes more precarious.
Additionally, the visibility into each cell’s SoH enables you to get the most out of each cell before replacing it. For instance, you’ll have the information to determine whether to assign it to second-life applications to maximize value or dispose of it.
TBOS also utilizes advanced predictive analytics to identify potential failures, supporting just-in-time maintenance while eliminating the costs of just-in-case maintenance. Operators can schedule repair when a cell approaches failure to maximize resource usage without costly unplanned downtime.
Moreover, you don’t need to overhaul a battery solution to take advantage of TBOS because the software sits on top of any battery pack you currently use (we’ve even mixed old-school lead-acid batteries with lithium-ion ones). We can implement it in any existing packs or yet-to-be-invented chemistries to improve a battery solution’s performance and longevity.
Building resiliency into battery solutions
The plan to impose tariffs will lead to many changes if materializes. But this won’t be the last time the battery supply chain faces upheavals. More companies have realized the importance of building resiliency into their green energy solutions to stay agile and profitable through uncertain global developments.
A battery strategy is more important than ever to help you chart the course and invest in the right technology. Our battery advisory services help you assess your current status, provide vendor-agnostic recommendations, and craft an implementation roadmap to support your growth trajectory.
