The promise and limits of industrial statecraft: the US response to China’s EV battery dominance

In the literature on US-China techno-strategic rivalry, the semiconductor sector has received particular attention – a sector where the US is the incumbent leader. This paper shifts the focus to the EV battery sector to examine the rivalry when China is the emerging leader. In responding to China’s leapfrogging in EV batteries, the Biden administration pursued a strong industrial policy to build domestic capacity. While the US ‘industrial statecraft’ in the Biden era catalysed significant investment in battery cell production, project initiations in upstream segments, particularly in battery mineral processing, remained very limited. The relative success in cell production reflects an alignment between policy goals and corporate interests: subsidies make onshoring competitive and returns predictable. In upstream segments, by contrast, US policy largely remained ineffective at mitigating entry barriers and de-risking uncertain returns. In conceptualising the promise and limits of industrial statecraft, the paper argues that outcomes are mediated by a state-capital bargain, conditioned by macro-structural context and underlying sectoral dynamics.