The Electric: These U.S. Battery Companies Think Full-Throttle Tariffs Are Great
President Donald Trump’s sky-high tariffs have triggered worries of a bloodbath in the electric vehicle and battery industries. But this week, we report on companies that are thrilled with the levies.
A lot of companies and investors are predicting a bottom-line disaster if President Donald Trump doesn’t seriously scale back or—better yet—eliminate the double- and triple-digit tariffs he has tacked onto imports. But Vikram Handa, managing director of Epsilon Carbon, isn’t one of them. Handa, whose India-based company is building a $650 million synthetic graphite factory in North Carolina, says the tariffs will make the difference as his company fights stiff Chinese competition.
Gene Berdichevsky, co-founder of California-based Sila Nanotechnologies, says much the same: Though the tariffs are roiling the economy and markets, his company—building a silicon anode factory in Washington State—needs them to help build a U.S. battery supply chain and break the country’s dependence on Chinese producers. “The trick is the transition is insanely hard, and so I don’t know if they’ll pull it off,” Berdichevsky told me. “But I think that’s kind of the ballgame.”
Trump’s tariffs should have surprised no one in the auto, car parts and battery industries: He made the tariffs a prime plank of his campaign for a second term, and he seemed to hold a special grudge against non-U.S. carmakers—and EVs in particular (more on that below). Though he didn’t mention foreign-made EV batteries and components, they are flooding the U.S. market, while the U.S. exports no batteries to speak of.
The undeniable point in the case of both EVs and batteries is that American manufacturers are way behind. Trump meant the tariffs to throw up a ring fence around the U.S. to allow American startups to develop competitive EV, battery and materials industries, protected from serious Chinese competition.
It’s not clear that the tariffs will succeed, especially since Chinese companies are so dominant and U.S. companies still depend on them for parts. But it’s fairly certain that U.S. EV and battery companies would have a far harder time without the tariffs.
It’s still not clear where tariffs on autos and batteries will end up. As of now, most foreign cars and auto parts, including electrodes and batteries, face a 25% tariff. Last week, Trump somewhat softened the blow on cars made in Canada and Mexico for two years. Levies on Chinese-made batteries, which are about three-quarters of the global market, remain at 145%. That alone could add $12,000 to the price of a high-end electric Ford F-150 Lightning if passed along fully to consumers.
In an earnings call last week, General Motors said the tariffs would cost the company up to $5 billion this year, or up to a quarter of its expected profit. Stellantis, which imported more than 350,000 vehicles into the U.S. last year, suspended sales and revenue guidance for 2025, as did Mercedes-Benz. Aston Martin, Jaguar Land Rover, Audi and Porsche halted the shipment of some or all their vehicles into the U.S.
None of the companies singled out the impact of the tariffs on their electric vehicles, but the levies fall with particular weight on the nascent Western EV industry.
Over the last week, battery companies serving the U.S. market, too, predicted a tough year: South Korea’s LG Energy Solution, GM’s primary battery provider and also a supplier to Tesla and Hyundai, said its second-quarter revenue would drop compared to the first quarter and that it would cut 2025 capital investments 30% because it expects to sell fewer batteries. Its South Korean rival, Samsung SDI—which supplies BMW, Rivian and Stellantis—told analysts that its U.S.-assembled batteries would be exempt from tariffs, but not the materials inside the batteries. That would drive up its battery prices, the company said.
In a note to clients last week, Wedbush Securities analyst Daniel Ives called the auto tariffs “untenable” and a threat to the industry. Trump’s recent backtracking on some of them, he argued, are “like putting a Band-Aid on a bullet wound, with U.S. automakers now dealing with the repercussions moving forward as this Twilight Zone situation will change the paradigm for the U.S. auto industry for years to come.”
But Epsilon’s Handa says tariffs on at least Chinese graphite companies have to be high because they otherwise tend to undercut embryonic U.S.-based rivals attempting to gain a footing.
Handa, a naturalized U.S. citizen with bachelor’s degrees in math and engineering from Tufts University, founded Epsilon in 2010. The company makes coal tar distillates—petroleum byproducts used as preservatives, protective coatings and an ingredient in rubber—producing them from steel production waste obtained from Handa’s father-in-law, Sajjan Jindal, who chairs JSW Group, owner of India’s largest steel mill. In 2020, amid the battery and EV investment frenzy, Handa formed an Epsilon subsidiary to make synthetic graphite for battery anodes involving the same raw material.
China produces virtually all the world’s synthetic graphite for battery anodes, but Handa saw projections of EV industry growth and began scouting for a U.S. factory location to make 30,000 tons of the material a year, enough for some 400,000 EV batteries.
In 2023, he settled on a site not far from Wilmington, N.C., where he said Duke Energy agreed to build a substation to provide Epsilon with 250 megawatts of power. In December, the Department of the Treasury granted Epsilon a $115 million income tax credit under the Inflation Reduction Act, which Handa said “helps your cash flow a bit once you start” production.
Trump has denigrated EVs and the IRA and threatened to seek repeal of the law, which would eliminate that tax credit. Either way, Handa said he plans to break ground in the beginning of next year at the North Carolina site and start production in 2027.
Chinese producers in the intensely competitive industry have so far tended to swallow tariffs—dropping their prices to maintain market share. They are able to do so in part because local governments in China often provide land and electricity at cut-rate prices, and sometimes for free, and regional banks frequently lend at low rates.
But Handa said most Chinese suppliers would find it virtually impossible to absorb the 145% tariff given that synthetic graphite currently sells for around $5 per kilogram in China. With the tariff, that graphite would sell for about $12/kg in the U.S., according to Benchmark Mineral Intelligence.
“That would be a level playing field,” Handa said. “I think the tariffs are good for us—for the ‘make in America’ story—because we start getting more competitive. Because the Chinese are really cheap, are subsidized, are dumping.”