China's government has recently imposed a series of export and overseas technology-transfer restrictions targeting lithium iron phosphate (LFP) cathode materials. Notably absent from the restrictions are ternary battery materials—a decision that has prompted speculation across the battery industry.
LFP and ternary lithium-ion batteries are the two dominant technologies powering electric vehicles (EVs) and energy storage systems. China plays a dominant role in the upstream production of both technologies, with LFP commanding over 90% market share and accounting for roughly 70% of total lithium-ion material supply—granting China formidable influence over the global battery ecosystem.
Yet China's decision to restrict only LFP exports suggests a calculated risk-reward assessment.
Unlike LFP, where China maintains nearly total control, the ternary battery supply chain is more globally fragmented, especially at the cell manufacturing level. Countries such as Japan and South Korea—led by Panasonic, LG Energy Solution (LGES), SK On, and Samsung SDI—retain strong influence in global ternary cell production.
A full export ban on ternary materials could be self-defeating
Mineral scarcity & international pushback
Ternary batteries rely on cobalt and nickel minerals tightly controlled by Western regulators. Restricting these materials could accelerate Western initiatives on domestic sourcing, recycling mandates, and supply-chain nationalism, ultimately eroding China's leverage built through LFP dominance.
Risk of escalated sanctions
China may risk triggering retaliatory measures from the US or allied countries, potentially including demands that resource-rich nations like Australia, Chile, and Bolivia withdraw mining rights from Chinese firms, thereby jeopardizing access to essential raw materials.
Chinese firms strengthen ternary position despite market decline
Chinese firms continue to strengthen their position in ternary battery materials. According to domestic data, the first half of 2025 saw global ternary material output reach 455,000 metric tons, a 4.5% year-over-year decline. Despite this drop, Chinese producers increased market share past 70%, capturing seven of the world's top 10 ternary-material producers, reinforcing their global leadership.
The Chinese ternary material market is segmented into three key categories. First, medium-nickel, high-voltage materials, fueled by strong demand from EV makers such as AITO, Li Auto, and Xiaomi. Second, high-nickel compounds, supported by demand from international battery giants like CATL and LGES, which continue to grow steadily. Finally, mid-to-low nickel products, where intensifying competition and margin pressure have squeezed Chinese firms' share.
Article translated by Elaine Chen and edited by Jerry Chen
