India’s Epsilon Advanced Materials is in talks to supply graphite anode materials to Japanese and South Korean battery makers in the US after the US imposed a 93.5% tariff on similar imports from China.

Epsilon, based in Mumbai, produces graphite anode materials used in EV batteries.

The company is working to finalize contracts within the next two to three months, said managing director Vikram Handa.

Epsilon announced plans in October 2023 for a US$650 million factory in North Carolina, with a projected capacity of 30,000 tonnes and operations expected by mid-2027.

The US requires about 500,000 tonnes of anode materials annually for EV and energy storage batteries, and China currently refines over 90% of global graphite for these components.

Epsilon also plans to invest over US$1.1 billion in a facility in Karnataka, India, but has yet to secure significant domestic interest.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Tariffs expose massive supply chain concentration risks in critical materials

The 93.5% US tariff on Chinese graphite anode materials reveals how dependent the EV industry remains on single-country suppliers, even for essential components1.

China currently refines over 90% of the world’s graphite into anode materials used in EV batteries, while the US needs 500,000 tonnes annually for its EV and energy storage needs1.

Even with Epsilon’s planned 30,000-tonne North Carolina facility by 2027, alternative suppliers can only address a fraction of total demand, highlighting the enormous scale challenge in diversifying critical supply chains1.

This concentration risk extends beyond batteries. Epsilon’s managing director referenced concerns about critical material supply chains, drawing parallels to China’s previous control over rare earth elements that created similar vulnerabilities1.

The situation demonstrates how national security concerns are increasingly influencing industrial policy, as companies like Epsilon must now balance geopolitical supply chain security against cost optimization.

2️⃣ Geographic manufacturing arbitrage shifts from cost to compliance and sustainability

Epsilon’s experience illustrates how tariffs are creating stark geographic differences in demand, with strong US interest but minimal traction in India where Chinese competitors remain price-competitive1.