The Gigafactory Mirage: How Battery Supply Chains Are Rewiring Global Power Politics

By Haruka Shimizu Apr. 14, 2025

Electric vehicles (EVs) were supposed to break the world’s oil addiction. Instead, they have created a new dependency—on lithium, nickel, cobalt, and graphite. These metals, essential to battery production, have transformed the geopolitics of energy into the geopolitics of mining. According to the International Energy Agency (IEA Global Battery Outlook, 2025), global lithium demand has increased 540 percent since 2018, while cobalt demand has tripled. EVs may emit no carbon from their tailpipes, but their supply chains are anything but clean.

Gigafactories—from Nevada to Ningde—promise a greener future. Yet beneath their glossy PR lies a web of environmental, labor, and strategic contradictions that threaten to turn the green transition into a new extractive frontier.

The Supply Chain Bottleneck

Battery supply chains are astonishingly fragile. Just four countries—China, Indonesia, the Democratic Republic of the Congo, and Australia—control over 80 percent of the world’s critical mineral output (U.S. Geological Survey, 2025). China alone refines 77 percent of global lithium and 68 percent of nickel.

This monopoly is not accidental. Over the past decade, Chinese firms such as CATL, BYD, and Ganfeng Lithium vertically integrated mining, refining, and assembly, creating a chokehold on the EV ecosystem. Western companies, while investing billions in new gigafactories, still depend on Chinese intermediaries for processed materials.

The World Bank Critical Minerals Outlook (2025) warns that a disruption in Chinese refining could delay global EV production by two years and cost the industry US$900 billion. Green mobility now relies on one of the least diversified supply chains in industrial history.

The Environmental Price of Clean Energy

Producing one ton of battery-grade lithium carbonate requires 2.2 million liters of water (European Environment Agency, 2024). In Chile’s Salar de Atacama, lithium brine extraction has depleted aquifers and destabilized fragile salt flat ecosystems. Local Indigenous communities report declining flamingo populations and crop failures due to groundwater loss.

Cobalt mining in the DRC, which supplies 70 percent of global cobalt, is no cleaner. The Amnesty International Cobalt Supply Report (2024) estimates that 15–20 percent of Congolese cobalt is mined by artisanal workers, including 40,000 children. Despite corporate pledges of “ethical sourcing,” traceability audits remain voluntary.

The paradox is chilling: the world’s green revolution rests on brown supply chains.

The Economics of Overcapacity

Governments are racing to build gigafactories as symbols of industrial revival. The OECD Energy Investment Review (2025) finds that global EV battery capacity now exceeds projected demand by 35 percent, largely due to overlapping subsidies in the U.S., EU, and China.

Yet most gigafactories depend on public financing and tax incentives. The U.S. Inflation Reduction Act (IRA) alone allocated US$43 billion in EV tax credits and production grants. In Europe, state aid accounts for 30 percent of total battery investment.

This competition has triggered what analysts call “green mercantilism”—a global subsidy race where industrial policy masquerades as climate policy. As profit margins shrink, many gigafactories may never reach break-even without perpetual government support.

Resource Nationalism and the Return of State Capitalism

Resource nationalism is surging. Indonesia banned raw nickel exports in 2020, forcing foreign companies to build local smelters. Chile followed with partial nationalization of lithium, granting majority state control to new projects. Zimbabwe, Ghana, and Mexico have since adopted similar policies.

While these moves aim to capture more value domestically, they also heighten geopolitical risk. The Brookings Global Resource Strategy Brief (2025) notes that such interventions have already increased project lead times by 40 percent and reduced foreign investment by US$15 billion annually.

For many countries, green industrialization is the new oil nationalism—offering short-term sovereignty but long-term fragility.

The Battery Recycling Myth

Recycling is often touted as the fix. But technical and economic barriers persist. Recovering lithium from spent cells remains 40 percent more expensive than mining new ore (IEA Circular Energy Systems Report, 2025). Meanwhile, less than 12 percent of global EV batteries are currently recycled, with the rest stockpiled or exported.

Even advanced recyclers like Redwood Materials and Li-Cycle struggle with purity issues: recycled lithium carbonate rarely meets battery-grade standards without costly reprocessing.

In short, circularity remains a slogan, not a system.

A New Energy Cold War

The scramble for battery dominance has sparked a new geopolitical tension. The U.S. and EU’s “friend-shoring” policies aim to relocate supply chains to allied nations, but this only deepens global fragmentation. The Atlantic Council Energy Security Monitor (2025) reports that trade restrictions on Chinese EV components have risen 310 percent since 2021, triggering retaliatory tariffs and investment blockades.

Meanwhile, China’s Belt and Road Initiative has pivoted from infrastructure to electrostructure—funding lithium plants in Bolivia, graphite refineries in Tanzania, and nickel projects in the Philippines. Energy independence is becoming the new arms race.

Rethinking the Gigafactory Paradigm

If the green transition is to avoid becoming a zero-sum scramble, three shifts are essential:

1. Diversification Over Dominance – Prioritize regional mineral processing networks, not mega-hubs dependent on one nation.

2. Public Accountability for Subsidies – Tie industrial funding to verified environmental performance metrics, not political visibility.

3. Degrowth in Demand – Encourage fewer, longer-lasting batteries through shared mobility, repairability, and solid-state efficiency gains.

The World Resources Institute (2025) estimates that extending EV battery life by just three years could reduce global lithium demand by 27 percent by 2040—more than any new mine could supply.

The Future of Power

Gigafactories symbolize a dream: that capitalism can be decarbonized without being redesigned. Yet the deeper truth remains—energy transitions do not erase extraction; they relocate it.

The new oil fields are not underground but under contract. The next century’s wars may not be fought over fuel—but over the metals that make electricity move.

Works Cited

“Global Battery Outlook.” International Energy Agency (IEA), 2025.

 “Critical Minerals Statistics.” U.S. Geological Survey (USGS), 2025.

 “Critical Minerals Outlook.” World Bank Group, 2025.

 “Environmental Impact of Lithium Brine Extraction.” European Environment Agency (EEA), 2024.

 “Cobalt Supply Report.” Amnesty International, 2024.

 “Energy Investment Review.” Organisation for Economic Co-operation and Development (OECD), 2025.

 “Global Resource Strategy Brief.” Brookings Institution, 2025.

 “Circular Energy Systems Report.” International Energy Agency (IEA), 2025.

 “Energy Security Monitor.” Atlantic Council, 2025.

 “Resource Efficiency and Battery Life Projection.” World Resources Institute (WRI), 2025.