A new antidumping/countervailing duties (AD/CVD) investigation could affect domestic manufacturing and deployment of lithium-ion energy storage and EV batteries in the United States.
In Dec. 2024, the American Active Anode Material Producers (AAAMP) filed petitions with the Dept. of Commerce and U.S. International Trade Commission seeking AD/CVD on imports of battery anode materials from China. AAAMP says that China’s dominance on active anode material (AAM) production has prohibited the domestic market from establishing competitive operations.
“The Chinese industry’s use of unfair pricing is harming American companies and workers,” said Daniel Pickard, international trade and national security practice group leader at Buchanan Ingersoll & Rooney and lead counsel for AAAMP. “The domestic industry is committed to opposing these unfair trade practices and ensuring that American manufacturing is able to compete on a level playing field.”
AAAMP is requesting duties on all active anode materials, whether synthetic, natural or a blend; with or without coating; regardless of whether in powder, dry, liquid or any other form. The group has generalized that anode materials typically have a maximum size of 80 microns, an energy density of at least 330 milliamp-hours per gram and a degree of graphitization of 80% or greater. Subject merchandise can be mixed with silicon or not, but the graphite contained must have a minimum purity content of 90% carbon. The duties could be levied against anode materials whether they’re imported separately, in a compound or in a finished battery.
The petition alleges dumping margins from 828% to 921% but does not suggest specific subsidy rates.
Commerce and the ITC have taken up the investigation, and the ITC is expected to reach a preliminary determination by Feb. 3, 2025. Commerce would then make its preliminary CVD determination in March and preliminary AD determination in May.
This case has already pitted EV and ESS manufacturers like Panasonic and Tesla against the emerging domestic anode materials industry. Testimonies are continuing to be introduced to the international court.
Battery diagram from UL.
What are active anode materials?
A battery needs both a cathode and anode to facilitate the flow of electric charge. During battery charging, electrons move from the positive cathode to the negative anode, and that electrical difference is what translates to stored energy. The stated “chemistry” of a battery is actually its active cathode materials — lithium iron phosphate (LFP) or lithium nickel manganese cobalt (NMC), for example. Active anode materials are typically carbon-based — like graphite powder or silicon oxide. The materials are mined, ground to a fine powder and then coated on the anode (usually copper foil).
How are active anode materials used in EV and ESS?
While the United States does produce graphite materials, it does not significantly produce the type of graphite used in active anode materials, which requires a specific particle size, density and purity. The AAAMP is requesting duties on Chinese AAM with at least a 90% purity level, although the group is ultimately targeting AAM used in EV and ESS products.
Battery manufacturers sign long-term offtake agreements with AAM producers and perform ongoing purity testing of the material. Tesla stated in court documents that it only uses AAM with 99.9% purity in its battery products, and no domestic AAM producers are currently able to hit that number.
What’s the status of the domestic AAM market?
Like with many energy-related products, China dominates the AAM market with an estimated 95% share. Non-Chinese graphite anode material production has been described publicly as “nascent.”
Syrah’s AAM facility in Vidalia, Louisiana.
AAAMP claims that it represents the only domestic manufacturers of active anode materials. Membership consists of Anovion Technologies (Georgia), Syrah Technologies (Louisiana), NOVONIX Anode Materials (Tennessee), Epsilon Advanced Materials 5060 (North Carolina) and SKI US/Birla Carbon (Georgia/South Carolina). Most of these companies are still considered to be in the startup stage. AAAMP claims in its petition that the domestic AAM industry is struggling to get off the ground because of China’s oversupply.
This makes the anode materials AD/CVD investigation different from those affecting solar panel imports. Whereas the domestic solar panel manufacturing industry can show a clear “before” and “during/after” difference in production when faced with dumped Chinese product, the domestic AAM manufacturing market has yet to become established.
“Due to China’s dominant market share, estimated to be in excess of 95%, the U.S. industry is in position that it must match Chinese prices in order to have sales opportunities,” the petition states.
What are the arguments in the anode materials AD/CVD?
Imported Chinese AAM do already have some tariffs, but not related to AD/CVD. Under the sweeping Sec. 301 tariffs against Chinese goods, artificial graphite is currently excluded, but natural graphite was added to the tariff list in Sept. 2024, and a 25% tariff rate is set to go into effect on natural graphite on Jan. 1, 2026. Regardless, AAAMP is asking for a deeper look at AAM used in the EV and ESS market.
Chinese AAM producers of note listed in the petition include BTR New Material and Gotion. Significant U.S. importers of these materials include BlueOval SK, Energizer, Ford, General Motors, LG, Panasonic, Samsung SDI, SK Battery and Tesla.
Tesla, so far, has been the most active party in rebutting AAAMP’s claims. As a significant battery producer in both the EV and ESS markets, the company depends on the highest-purity AAM, which is currently only matched by Chinese producers. Tesla said it has received samples from a few of AAAMP’s members and hopes to use domestic product soon. The significant import of Chinese AAM is not impacting the lower purity levels of domestic materials, Tesla said.
Tesla Megapack. Credit: DSD Renewables
“The domestic industry is in a normal startup phase as it learns and develops the capability to produce AAM to customers’ specifications,” said Dinesh Swamynathan, Tesla’s senior director for battery cell supply chain, in recorded testimony. “Tesla, alongside the U.S. government and other cell manufacturers, is already working to help the establishment of a domestic AAM industry. That process can take years, and additional duties would not speed up the process.”
Panasonic made similar statements about the desire to work with domestic AAM producers, but the industry is not yet established.
“Panasonic wants to source U.S. supply. The Inflation Reduction Act creates incentives to source U.S. supply. Once U.S. producers demonstrate that they can produce AAM to Panasonic’s standards, we will gladly purchase from them,” said Preston Zhang, senior manager in the strategic materials engineering group at Panasonic Energy of North America, in recorded testimony.
When the AD/CVD petition was first submitted, analyists at Roth Capital Partners said it could have “disruptive, far-reaching impacts” due to the request for tariffs on AAM separately and when used in finished batteries. Roth estimated that the anode represents 10 to 15% of the battery’s cost, or about $15/kWh for a DC block priced at $120/kWh. If a 900% tariff were placed on the anode, Roth estimates the incremental cost could be about $135/kWh, representing a 125% cost increase on the battery to $255/kWh.
The industry awaits the ITC’s decision next month. Commerce then has the final say on any tariff amounts.
