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After rare earth magnets, China has now banned the export of key technology to batteries used in electric vehicles. This move by China may affect electric vehicle manufacturers around the world. Thus, China not only seeks to maintain its technological supremacy, but is also adopting strategies to strengthen its leadership in the global EV battery market.

According to China’s Commerce Ministry, now a government license will be required to export some advanced technology to EV battery production and lithium processing outside the country. This means that unless the government gives permission, this technology cannot be shared by any foreign investment, trade or technical partnership. Earlier, China had also banned the export of some rare earth materials and their magnets, which are used not only in EVs but also in electronics and defense equipment.

China is already a leader in the EV battery industry. According to market research firm SNE, about 67% of EV batteries sold in the world are from Chinese companies. This includes big names like CATL, BYD and Goshan. CATL is not only a battery supplier to Tesla, but also operates plants in Germany, Hungary and Spain. At the same time, BYD is set to overtake Tesla to become the world’s largest EV manufacturer in 2024. Its battery production is spread in countries like Hungary, Thailand and Brazil.

The new restrictions will specifically apply to the cathode production technology of lithium iron phosphate (LFP) batteries. LFP batteries are cheap, safe and charge quickly. According to reports, in 2023, China’s share in LFP battery production was 94% and lithium processing was 70%. Experts believe that this move could create a shortage of batteries in the US and Europe as well as developing markets like India, which could delay the international expansion plans of many companies.