The hidden history of the lithium-ion battery supply chain

01The oil crisis seeds

The story begins with the 1973 oil crisis. When Arab producers embargoed exports, the industrialized world confronted its dependence on petroleum. Governments funded alternative energy research, and batteries became a strategic priority. The Advanced Research Projects Agency in the United States began supporting electrochemistry programs that would lay the groundwork for rechargeable lithium batteries.

Stanley Whittingham, working at Exxon in the 1970s, built the first lithium-based rechargeable battery using titanium disulfide as the cathode. It worked at room temperature but used metallic lithium as the anode, which was dangerously reactive. The battery was a proof of concept, not a product.

02Goodenough's cathode breakthrough

In 1980, John Goodenough at Oxford University identified lithium cobalt oxide as a cathode material that could store more energy than Whittingham's titanium disulfide. The material was stable at high voltages and could release lithium ions reversibly. This discovery doubled the achievable energy density and became the foundation of every commercial lithium-ion cell for decades.

Goodenough's lab had no industrial partner. The work was published openly, and it would take more than a decade for the finding to reach the market. The supply chain did not exist yet; it had to be imagined around a material that nobody was manufacturing.

03Yoshino's commercial prototype

Akira Yoshino at Asahi Kasei in Japan took the next step in 1985. He replaced the reactive metallic lithium anode with petroleum coke, a carbon material that could intercalate lithium ions safely. Combined with Goodenough's cobalt oxide cathode, this produced a cell that was rechargeable, energy-dense, and non-explosive.

Yoshino's design was the first true lithium-ion battery: ions shuttled between two insertion materials without metallic lithium plating. He filed patents and approached Sony, which had the manufacturing infrastructure and consumer electronics market to commercialize the technology.

04Sony's 1991 launch

Sony released the first commercial lithium-ion battery in 1991, powering its Handycam camcorder. The cell delivered roughly 80 watt-hours per kilogram, far exceeding nickel-cadmium alternatives. Sony invested heavily in manufacturing, building dedicated production lines and establishing quality standards that became industry benchmarks.

The launch created demand for cobalt, lithium carbonate, and electrolyte chemicals at industrial scale. A supply chain that had been theoretical now needed mines, refiners, and component suppliers. Japan's electronics industry became the first hub.

05The shift to Asian manufacturing

Through the 1990s and 2000s, production migrated from Japan to South Korea and then to China. Samsung SDI and LG Chem in Korea scaled up to serve global electronics brands. China entered later but moved aggressively, using state subsidies, cheap labor, and strategic mineral acquisition to build capacity faster than any previous player.

The shift was driven by cost. Labor, land, and energy were cheaper in China, and government policy explicitly targeted battery manufacturing as a strategic industry. By 2010, China had become the largest producer of lithium-ion cells, a position it has only expanded since.

06China's strategic entry

China's approach was comprehensive. The government identified batteries as critical to its industrial future and built an entire ecosystem: mining investments in Africa and South America, refining capacity at home, cell manufacturing at scale, and electric vehicle subsidies that guaranteed domestic demand. CATL and BYD emerged as global leaders.

This strategy created the modern supply chain's defining feature: geographic concentration. Most of the world's battery minerals are refined in China, most cells are made in China, and the tools, expertise, and standards are increasingly Chinese.

07The megafactory era

Tesla's Gigafactory in Nevada, announced in 2014, reframed battery production as gigawatt-scale infrastructure. The idea was that battery cost would fall with volume, and volume required factories orders of magnitude larger than existing plants. This prediction proved correct: cell prices dropped from over $1,000 per kilowatt-hour in 2010 to under $100 by 2024.

The megafactory era transformed the supply chain. Mineral demand multiplied, new mines opened, and countries outside China began building their own factories. The European Union, the United States, and India all launched industrial policies to domestic manufacturing. The chain that Sony started in 1991 had become a arena of geopolitical competition.