Contents

• Introduction
• Historical Trends
• Imports and Exports
• Imports
• Exports
• Global and Domestic Prices
• Domestic Battery Manufacturing Output and Employment
• Domestic Supply Chain Investments
• Cell Assembly Planned Capacity Increases with Demand
• Component Planned Capacity Increases Less Than Cell Capacity
• Cell Component Supply Chain and Policy Uncertainty
• Policy Options for Congress
• Continued Oversight
• Product Demand
• EV Tax Credits
• Energy Tax Credits
• Domestic Preference
• Product Supply
• Fixed Costs and Capital
• Variable Costs
• Trade Protections
• Visibility
• Domestic Manufacturing Data
• Import and Export Data

Summary

Due to increases in demand for electric vehicles (EVs), renewable energies, and a wide range of consumer goods, the demand for energy storage batteries has increased considerably from 2000 through 2024. Energy storage batteries are manufactured devices that accept, store, and discharge electrical energy using chemical reactions within the device and that can be recharged to full capacity multiple times throughout their usable life. Although a wide range of chemistry types for such batteries are available, the lithium-ion battery became the most widely adopted across a wide range of end uses (e.g., EVs, power grid storage, computers, electric bicycles) during the 2010s and 2020s.

Congress has created a broad array of policy frameworks supportive of the domestic battery manufacturing industry. Such policies initially tended to be more focused on supporting downstream consumers of batteries, which in turn generated demand for batteries and indirectly supported the battery manufacturing industry. Over time, this policy framework shifted focus toward the battery manufacturing industry itself with legislation such as the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5). Most recently, the Infrastructure Investment and Jobs Act of 2021 (IIJA; P.L. 117-58) and P.L. 117-169 (commonly known as the Inflation Reduction Act, or IRA) further expanded and specified this policy framework in support of advanced energy storage battery manufacturing.

Manufacturers in the People's Republic of China (China) dominate the U.S. and global supply of lithium-ion batteries. China's share of the global battery manufacturing supply chain is approximately 70%-90%. Imports of lithium-ion batteries and battery parts from China to the United States grew at accelerated rates into the 2020s. Manufacturers in China captured market share partly because of historically lower prices compared with global and U.S. competitors. Manufacturers located in China are able to maintain lower prices because of certain industrial practices or policies, which commonly occur there, such as vertical integration, economies of scale, trade protections, subsidies, and currency devaluation. Although lower-priced batteries may benefit battery consumers (e.g., EV manufacturers) in the short term, reliance on imports for these critical components may present supply chain diversification risks and long-term market vulnerabilities.

Investments in some aspects of the domestic battery manufacturing supply chain have occurred, and imbalances within the domestic supply chain may continue. The U.S. manufacturing industry for lithium-ion energy storage batteries has largely matured in some downstream processes, such as battery pack assembly. Domestic investment in further upstream activities, such as battery cell component manufacturing and active material manufacturing, has not kept pace with investment in further downstream processes. If domestic pack and cell assemblers, for example, continue to be reliant on imports for certain components and materials, then the energy independence and supply chain resilience issues may continue to be areas of concern for some Members of Congress.

Congress might consider a range of policy options that may impact the battery manufacturing industry, including (1) overseeing existing programs; (2) expanding federal data collected on the battery supply chain; (3) revising the EV tax credit sourcing requirements; (4) changing the specificity of production subsidies for components; (5) introducing job training programs for advanced battery manufacturing; (6) assessing trade barriers; and (7) augmenting supply chain visibility tools.

If Congress were to consider taking further action related to the battery manufacturing industry, certain potential trade-offs or themes might emerge, including (1) tension between battery consumers (e.g., EVs, grid power, computers) and battery manufacturers; (2) conflict with trade agreements and trading partners; (3) market distortions when the government takes action in a market economy; (4) integration or disintegration between domestic supply chain participants; and (5) impacts on federal expenditures.

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Introduction

Congress has long shown interest in the U.S. energy sector, the U.S. manufacturing sector, and U.S. supply chains through hearings, reports, and legislation. An increasingly essential component of these sectors is energy storage batteries. Energy storage batteries are manufactured devices that accept, store, and discharge electrical energy using chemical reactions within the device and that can be recharged multiple times throughout their usable life. They are used in conjunction with a wide range of energy, transportation, consumer, and manufacturing goods and services. Advanced lithium-ion energy storage batteries are an increasingly common battery type used across the U.S. economy.¹ A range of goods, services, and infrastructures that Congress has expressed an interest in have critical functionalities that currently use advanced lithium-ion energy storage batteries at a variety of scales; examples include electric vehicles (EVs), the power grid, data centers, robots, drones, and computers.²

In support of this range of congressional priorities, Congress has incrementally created a broad policy framework that might affect the battery manufacturing industry. The most recently enacted components of this framework include the Infrastructure Investment and Jobs Act of 2021 (IIJA; P.L. 117-58) and P.L. 117-169 (commonly known as the Inflation Reduction Act, or IRA). Coinciding with the incremental establishment of this legislative framework, a lithium-ion energy storage battery manufacturing industry emerged in the United States during the 2010s and into the 2020s.

This report (1) analyzes historical trends in the energy storage battery manufacturing industry; (2) analyzes current and projected investment trends within the domestic value chain for lithium-ion energy storage battery manufacturing; and (3) discusses some policy options available to Congress should Congress seek to take further action.

Historical Trends

Domestic lithium-ion energy storage battery manufacturing industry has incrementally grown since 2000 by some measures.³ To varying degrees, this incremental growth is broadly associated with vehicle electrification, renewable energy adoption, manufacturing innovations, and policy frameworks built around the energy, transportation, and manufacturing industries. From approximately 2000 to 2009, domestic battery manufacturing decreased compared to the prior decade as the U.S. economy exhibited broader deindustrialization patterns.⁴ Then, since 2009, some battery manufacturing activities increased, generally because of factors such as vehicle electrification, deployment of solar power systems, decreased costs of lithium-ion batteries, and some public policy actions. Although such growth has relocated some elements of the battery manufacturing supply chain to the United States, some elements remain abroad.

Data for the lithium-ion energy storage battery manufacturing industry are often grouped together with data for other types of batteries, such as lead-acid batteries and primary batteries. This report uses different data sources covering both broad and specific battery industries to generate insights into the advanced lithium-ion energy storage battery manufacturing industry.

Imports and Exports

U.S. import and export data on lithium-ion energy storage batteries suggest that quantity demanded increased for lithium-ion batteries and domestic production. The data also indicate continued competitive pressure from imports.

Imports

U.S. import data on energy storage batteries show an increase in imports of (1) lithium-ion energy storage batteries and (2) parts for energy storage batteries.⁵ Figure 1 shows that total imports of all energy storage batteries increased from 2009 through 2024⁶ and that nearly all of this increase was due to increases in imports of lithium-ion energy storage batteries.⁷ In 2009, lithium-ion batteries represented 17% of total energy storage battery imports; by 2024, that percentage had increased to 84%.⁸ Imports of battery parts also increased during this period (see Figure 2), with a similar pattern of accelerated increases into the 2020s. The increase in parts imports was driven by non-lead-acid energy storge battery parts. Under the U.S. Harmonized Tariff Schedule (HTS) classification system, battery parts include battery cells, battery modules, separators, and other unspecified parts.⁹ The People's Republic of China (China) is the main source of lithium-ion energy storage battery imports: 69% of finished lithium-ion energy storage battery imports and 33% of imported parts for non-lead-acid energy storage batteries came from China in 2024.¹⁰ Because of a variety of factors, such as subsidies, trade protections, overcapacity, economies of scale, vertical integration, and currency devaluation, manufacturers in China can produce batteries at lower costs, which has allowed them to capture 70%-90% of the global value chain for lithium-ion batteries.¹¹

Figure 1. Imports of Energy Storage Batteries (nominal dollars)

Source: CRS with U.S. Import and Export Merchandise trade statistics queried by CRS using the U.S. Census Bureau's USA Trade Online data tool. Notes: Data on imports of lithium-ion batteries are publicly available going back to 2009. From 2009 through 2011, Lithium-Ion Storage Batteries is published under Harmonized Tariff Schedule (HTS) code 8507.80.8010. From 2012 through 2024, Lithium-Ion Storage Batteries is published under HTS code 8507.60. All Storage Batteries is the sum of all six-digit HTS codes from 8507.10 to 8507.80. Non-Lithium Storage Batteries is that sum minus Lithium-Ion Storage Batteries. CRS did not adjust these data for inflation.

Figure 2. Imports of Parts for Storage Batteries (nominal dollars)

Source: CRS with U.S. Import and Export Merchandise trade statistics from the U.S. Census Bureau's USA Trade Online data tool. Notes: Lead-Acid Storage Battery Parts is published within HTS code 8507.90.4000. Storage Battery Parts Excluding Lead-Acid Type is published within HTS 8507.90.8000. All Storage Battery Parts is the sum of these two series. CRS did not adjust these data for inflation.

Exports

U.S. domestic export data can provide insights into domestic production because, by definition, any domestic goods exported from the United States were grown, produced, manufactured, or changed¹² within the physical boundaries of the United States, including U.S. Foreign Trade Zones.¹³ Export data on storage batteries show similar trends as import data (see Figure 1 and Figure 2) over the same time frame: an increase in energy storage battery exports largely driven by lithium-ion batteries (see Figure 3) and an increase in exports of storage battery parts largely driven by parts for non-lead-acid batteries (see Figure 4). Exports of non-lead-acid battery parts showed a large increase in 2024 almost entirely from exports to Mexico. Exports of non-lead-acid battery parts to Mexico increased from $43 million in 2023 to $1.9 billion in 2024, which constituted 95% of all non-lead-acid battery part exports from the United States in 2024. Mexico's import data do not show increases in battery part imports from the United States, but Mexico's imports of finished lithium-ion batteries from the United States increased from $109 million in 2023 to $1.8 billion in 2024, which might suggest some HTS classification differences between the United States and Mexico, with the increases being recorded as finished batteries in Mexico's system.¹⁴ This may further suggest that the parts being exported from the United States to Mexico might be battery cells or battery modules—rather than cell components such as separators.

Figure 3. Domestic Exports of Energy Storage Batteries (nominal dollars)

Source: CRS with U.S. Import and Export Merchandise trade statistics from the U.S. Census Bureau's USA Trade Online data tool. Notes: Export data on lithium-ion batteries are publicly available going back to 2012. Lithium-Ion Storage Batteries is published under Census Schedule B classification code 8507.60. All Storage Batteries is the sum of all six-digit classification codes from 8507.10 to 8507.80. Non-Lithium Storage Batteries is that sum minus Lithium-Ion Storage Batteries. CRS did not adjust these data for inflation.

Figure 4. Domestic Exports of Parts for Energy Storage Batteries (nominal dollars)

Source: CRS with U.S. Import and Export Merchandise trade statistics queried by CRS using the U.S. Census Bureau's USA Trade Online data tool. Notes: For consistency with Figure 3, 2012 is the starting year. All Storage Battery Parts is published within Census Schedule B classification code 8507.90. Storage Battery Parts Excluding Lead-Acid Type is published under Census Schedule B classification code 8507.90.8000. Lead-Acid Storage Battery Parts is the difference between All Storage Battery Parts and Storage Battery Parts Excluding Lead-Acid Type. CRS did not adjust these data for inflation. Nearly all of the increase in 2024 was due to exports to Mexico.

Global and Domestic Prices

In addition to broad demand increases from downstream consumers of batteries, price decreases may also help explain the increase in imports and exports of lithium-ion energy storage batteries. All things remaining constant, as the price of a commodity decreases, the consumption of that commodity increases. Global prices of lithium-ion energy storage batteries have decreased because of a wide range of factors (e.g., industrial innovations, technological development, economies of scale, overcapacity, and subsidies). Depending on country-specific policies and conditions, some countries tend to have lower production costs and prices than others.¹⁵ Such lower production costs contribute to private-sector decisions about where to locate manufacturing facilities and capacity.¹⁶

Production costs of domestically manufactured batteries may be higher than some import prices of batteries. Domestic subsidies and tariffs may cumulatively offset the difference.¹⁷ For example, see Figure 5 for a comparison of domestically produced batteries and imports of batteries from China. According to BloombergNEF, in 2024, the market price of some U.S. lithium-ion batteries would have been approximately 90% more than the price of equivalent batteries imported from China but for U.S. subsidies and tariffs. The U.S. production subsidies and tariffs on batteries imported from China might have resulted in market prices for some U.S. batteries being less than those from China.¹⁸

Figure 5. Lithium-Iron-Phosphate Battery Price Comparison

Source: BloombergNEF, "Long-Term Electric Vehicle Outlook 2024 – Data," June 2024.

Domestic Battery Manufacturing Output and Employment

Domestic manufacturing production output and sales are measures and outcomes of economic activity. The Bureau of Economic Analysis (BEA) and the U.S. Census Bureau (Census) publish output and sales data on a wide range of industries, including energy storage battery manufacturing. They do not publish detailed data for advanced lithium-ion energy storage battery manufacturing specifically. This section considers sector-wide output and sales data alongside other sources to make inferences about trends in domestic production and sales of lithium-ion energy storage batteries.

Domestic energy storage battery manufacturing output has fluctuated since 2000 (see Figure 6).¹⁹ From 2020 to 2023, inflation-adjusted output increased by 57.6%, which resulted in output reaching the highest level on record since at least 1997.²⁰ The sector-wide data obscure some important underlying industrial shifts that occurred during the 2010s, which are described below.

Figure 6. Gross Output of Energy Storage Battery Manufacturing (FY2017 constant dollars)

Source: CRS, using data covering Storage Battery Manufacturing from the dataset "U.Real Gross Output by Industry – Detail Level" of the Bureau of Economic Analysis (BEA) from BEA's Interactive Data Tables tool for Gross Domestic Product by Industry. Notes: The data are inflation-adjusted by BEA with a base year of 2017.

A compositional shift away from lead-acid energy storage batteries and toward other types of energy storage batteries occurred in the battery manufacturing industry during the 2010s. For example, from 2013 to 2017, sales of domestically produced energy storage batteries, excluding lead-acid batteries, increased and composed a larger proportion (though still a minority) of the industry sales (see Figure 7).²¹ From 2013 to 2017, nominal gross sales of non-lead-acid batteries grew from approximately $665 million in 2013 to approximately $1.147 billion in 2017.²² This growth outpaced the increase in lead-acid battery nominal gross sales, resulting in non-lead-acid's proportion of the domestic energy storage battery manufacturing industry growing from approximately 10.8%²³ of the industry in 2012 to 17.3%²⁴ of the industry in 2017. This compositional shift toward domestically produced non-lead-acid batteries coincided with growth in U.S. domestic exports of lithium-ion energy storage batteries (illustrated in Figure 3) and with a wide range of industry and academic reports of lithium-ion battery factories starting or expanding production in the United States during the 2010s.²⁵ The changes in the two data series—domestic sales and exports—are of the same order of magnitude; nominal sales of domestically produced non-lead-acid energy storage batteries increased by $482 million from 2013 to 2017, and nominal exports of domestically produced lithium-ion energy storage batteries increased by $535 million over that same time frame.²⁶

Figure 7. Sales of Energy Storage Battery Manufacturing, Excluding Lead-Acid Batteries (nominal dollars)

Source: CRS using 2017 data from Census Bureau, "Economic Surveys: AM1631VS101 Annual Survey of Manufactures: Value of Products Shipments: Value of Shipments for Product Classes: 2016, 2015, 2014 and 2013," accessed January 21, 2025, https://data.census.gov/table?d=ECNSVY+Annual+Survey+of+Manufactures+Annual+Survey+of+Manufactures+Value&p=335911:3359111:3359114:3359118; and Census Bureau, "Economic Census: EC1700NAPCSPRDINDAll Sectors: Products by Industry for the U.S.: 2017," accessed January 21, 2025, https://data.census.gov/table?g=010XX00US&y=2017&d=ECN+Core+Statistics+Economic+Census&n=00&napcs=2030050000:2030075000:2030075003:2030075006:2030100000:2030125000. Notes: The Census Bureau published detailed sales data annually through the Annual Survey of Manufactures (ASM) and every five years through the Economic Census (EC). Non-lead-acid battery data are presented for 2013 through 2017. From 2013 through 2016, the data field charted is the ASM's "Product Shipments Value," and for 2017, the field charted is the EC's "Sales, value of shipments, or revenue of NAPCS collection codes." The ASM and EC are designed to supplement each other; thus the data definitions are generally comparable. The Census Bureau includes intracompany shipments and exports in the sales figures. CRS did not adjust these data for inflation.

Employment is a measure and outcome of economic activity. The U.S. Bureau of Labor Statistics (BLS) publishes employment data on a wide range of industries, including the battery manufacturing industry. BLS does not always publish data at all levels of detail. For the battery manufacturing industry, BLS does not publish data specifically on advanced lithium-ion energy storage battery manufacturing but does publish more general data covering the total battery manufacturing industry that might provide insights into the underlying advanced lithium-ion energy storage battery manufacturing industry when considered with other data sources. The lithium-ion battery manufacturing industry may not compose a majority of storage battery manufacturing employment, but it may compose enough to be a contributor to the overall trend.²⁷

Battery manufacturing employment was higher in 2024 than in any previously recorded year since 1972.²⁸ Battery manufacturing employment grew at successively accelerating rates from 2015 through 2018 and from 2021 through 2023 (see Figure 8).²⁹ Growth continued in 2024, and employment in battery manufacturing reached a new record high of 54,400 employees in 2024, while employment in the entire manufacturing sector decreased.³⁰

Figure 8. Battery Manufacturing Employment in the United States

Source: CRS, using Current Employment Statistics Survey (National) data covering North American Industry Classification System (NAICS) code 33591 from the Bureau of Labor Statistics' One Screen Data Tool. Note: Accelerated decreases in 2001, 2002, 2009, and 2020 occurred during economic recessions.

The confluence of these trends in employment, sales, prices, imports, and exports likely indicates the growth of the lithium-ion energy storage battery manufacturing industry in the United States in recent years. This growth appears to have largely occurred within the more final-stage assembly activities rather than in materials and components manufacturing.

Domestic Supply Chain Investments

This section examines data trends for planned investment increases in manufacturing facilities for advanced lithium-ion batteries and their components across the domestic supply chain and different manufacturing processes. The manufacturing process and supply chain for advanced lithium-ion energy storage batteries can be complex and is sometimes spread vertically across multiple entities.³¹ The entire process, from raw material extraction through completion of an end-use battery pack, may involve multiple international entities. Figure 9 shows a conceptual schematic of this supply chain to visualize, interpret, and clarify the battery industry investments, relationships, and potential imbalances discussed in this section.

Figure 9. Lithium-Ion Battery Supply Chain

Source: CRS. Notes: The labeling of upstream, midstream, and downstream segments is a common technique in industrial policy and supply chain analysis. It is designed to help policymakers and analysts process information and understand the relationships between supply chain participants. A wide range of sources classify activities into the segments as illustrated here. PVDF = polyvinylidene fluoride.

Segmentation of the battery manufacturing supply chain and its activities can be a tool to help policymakers understand how investments up and down the supply chain may relate to each other. As illustrated in Figure 9, the battery manufacturing supply chain has three main segments: (1) upstream, (2) midstream, and (3) downstream. Each segment has its own industrial processes, relationships, and material flows. The upstream segment includes activities such as raw material extraction and industrial supplies production. Midstream activities entail taking upstream products as inputs, processing them into discrete battery cell components,³² and then assembling those components into battery cells. Participants in the downstream segment assemble battery cells into battery modules and packs that have suitable characteristics for each end use, such as EVs, grid storage, and electronics.

Generally, a completed advanced lithium-ion battery contains components and elements typically produced by different supply chain participants. A completed end-use advanced lithium-ion energy storage battery is a battery pack containing battery modules and a battery management system.³³ A battery module contains battery cells and elements of the battery management system. A battery cell contains an anode, a cathode, an electrolyte, and a separator. Anodes and cathodes are made of certain active materials and current collector foil, among other materials. These parts are complex, often contain plastics and rubbers, and are made from raw materials such as lithium, cobalt, iron, phosphate, fluorspar, graphite, copper, and aluminum.

Over the last decade, there has been slow and iterative growth of the battery manufacturing supply chain. Although some elements of the domestic supply chain grew, data trends for production and investments in different manufacturing facility types indicate that this was not uniformly so across the supply chain. Generally, during the 2010s, growth in the domestic battery manufacturing industry tended to occur more in the downstream final-stage assembly activities, such as battery pack, battery module, and EV assembly, with such assemblers partially relying on imports for battery cell components and battery cells; while there were some increases in battery cell manufacturing capacity in the United States during the 2010s, such increases generally tended to be smaller than capacity increases in pack and module assembly. Trends in recent investment announcements indicate that manufacturers may be in the process of onshoring the battery cell assembly activities; however, there may also be continued imbalances in the components that cell assemblers require.

A number of sources indicate that such investment increases in cell assembly might be sufficient to meet projected total demand for batteries in sold products (see Figure 10), but the planned investment increases in some cell component and active material manufacturing activities might be insufficient to meet the needs of cell assemblers.

Figure 10. U.S. Lithium-Ion Projected Battery Demand

Source: David Gohlke et al., Quantification of Commercially Planned Battery Component Supply in North America Through 2035, Argonne National Laboratory (Argonne), March 2024, https://publications.anl.gov/anlpubs/2024/03/187735.pdf; Pieter Gagnon et al., Cambium 2022 Scenario Descriptions, National Renewable Energy Laboratory, January 2023, https://scenarioviewer.nrel.gov; and Argonne, Vehicle and Mobility Systems Department, "TechScape," October 6, 2023, https://vms.taps.anl.gov/tools/techscape/; Environmental Protection Agency (EPA), "Proposed Rule: Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles – Phase 3," March 13, 2025, https://www.epa.gov/regulations-emissions-vehicles-and-engines/proposed-rule-greenhouse-gas-emissions-standards-heavy; EPA, "Proposed Rule: Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles," February 28, 2025, https://www.epa.gov/regulations-emissions-vehicles-and-engines/proposed-rule-multi-pollutant-emissions-standards-model. Note: CRS retrieved the chart from Gohlke et al., who combined data from Argonne's TechScape dataset, the Cambium dataset of the National Renewable Energy Laboratory, and some EPA proposed rule documents to generate this figure. According to Gohlke et al.'s analysis and charting of these projections, they show increased usage from different consumers of batteries from 2022 to 2035. For more information on methods and data used to generate this figure, see pages 9 and 10 of Gohlke et al., Quantification of Commercially Planned Battery Component Supply in North America Through 2035.

Cell Assembly Planned Capacity Increases with Demand

A wide range of sources project that investments in cell assembly facilities are increasing to meet projected demand from consumers of batteries. According to data compiled and modeled by Argonne National Laboratory (Argonne) on investment announcements made by manufacturers, U.S. production capacity of battery cells is projected to grow from 2018 through 2035 to meet the projected growth in domestic battery demand (see Figure 11).³⁴ The Environmental Defense Fund projects that announced future capacity for final battery manufacturing is high enough to meet demand from EV manufacturers.³⁵ Some of these assembly facilities may be owned and operated by automotive companies, some may be joint ventures with automotive companies, and some may be unrelated to automotive companies.³⁶

Figure 11. Projected Lithium-Ion Cell Production Capacity

Source: Gohlke et al., Quantification of Commercially Planned Battery Component Supply; Tsisilile A. Barlock et al., Securing Critical Materials for the U.S. Electric Vehicle Industry, Argonne, February 2024, https://publications.anl.gov/anlpubs/2024/03/187907.pdf. Note: CRS retrieved this figure from Gohlke et al. The bars represent projected capacity, and the line represents projected demand. When projecting production capacity contained in this chart, Gohlke et al. used announcements made by private companies and included adjustments for qualitative evaluations of how concrete the plans are. Gohlke et al. retrieved projected demand estimates from Barlock et al., Securing Critical Materials for the U.S. Electric Vehicle Industry, which models market data and policy conditions to estimate projected demand.

Component Planned Capacity Increases Less Than Cell Capacity

Although the domestic increase in cell assembly capacity is projected by researchers to meet future demand, this is projected not to be the case for the components required by cell assemblers. According to a range of sources, planned investment in domestic facilities for cell component and battery grade materials appears to lag behind projected cell assembly capacity. According to data compiled and modeled by Argonne, certain component types may not have sufficient capacity to meet the projected expansion in cell assembly capacity. A 2024 McKinsey & Company report also projects that North American capacity for components will be less than the demand for those components.³⁷ A 2024 Carnegie Endowment report also found that facility capacity for cell components is relatively underrepresented in the United States compared with facility capacity for battery cells.³⁸ The components and materials with future capacity projected to be less than future cell capacity and demand include (1) anode and cathode materials (electrode materials), (2) current collector foil, and (3) separators; all key components of advanced lithium-ion batteries. In particular, current collector foil manufacturing (see Figure 12 and Figure 13) and separator manufacturing (see Figure 14) may be areas where planned domestic investment particularly appears to lag behind demand.

Cell Component Supply Chain and Policy Uncertainty

Uncertainty regarding supply, demand, and public policy may be contributing factors to the potential underinvestment in electrode materials, current collector foil, and separators. Argonne suggests that potential domestic manufacturers of cell components and active materials may be waiting for more upstream and downstream investments to materialize before they commit to investments themselves; these midstream manufacturers may need a market for both suppliers and customers to further materialize before they can manifest investments themselves. Additionally, certain aspects of the IIJA and rulemaking process may have introduced ambiguity regarding some cell component manufacturer's eligibility for certain production tax credits. For example, some current collector manufacturers and separator manufacturers may have been unsure whether they would receive certain tax credits pursuant to the IRA because cathode foils are not explicitly listed in the statute as other components were.³⁹ The Internal Revenue Service (IRS) later clarified that cathode foils and separators are eligible for credits pursuant to the IRA.⁴⁰

Figure 12. Aluminum Current Collector Foil Planned Capacity

Source: Gohlke et al., Quantification of Commercially Planned Battery Component Supply; Barlock et al., Securing Critical Materials for the U.S. Electric Vehicle Industry. Note: CRS retrieved this figure from Gohlke et al. The bars represent projected capacity, the green line represents projected battery demand (see Figure 11), and the purple line represents projected cell announcements (see Figure 11). When projecting current collector production capacity, Gohlke et al. used announcements made by private companies and included adjustments for qualitative evaluations of how concrete the plans are. Gohlke et al. retrieved projected demand estimates from Barlock et al., Securing Critical Materials for the U.S. Electric Vehicle Industry, which models market data and policy conditions to estimate projected demand.

Figure 13. Copper Current Collector Foil Planned Capacity

Source: Gohlke et al., Quantification of Commercially Planned Battery Component Supply; Barlock et al., Securing Critical Materials for the U.S. Electric Vehicle Industry. Note: CRS retrieved this figure from Gohlke et al. The bars represent projected capacity, the green line represents projected battery demand (see Figure 11), and the purple line represents projected cell announcements (see Figure 11). When projecting current collector production capacity, Gohlke et al. used announcements made by private companies and included adjustments for qualitative evaluations of how concrete the plans are. Gohlke et al. retrieved projected demand estimates from Barlock et al., Securing Critical Materials for the U.S. Electric Vehicle Industry, which models market data and policy conditions to estimate projected demand.

Public comments in the Federal Register related to separators are illustrative of how statutory construction and the rulemaking process can impact market and policy uncertainty for market participants.⁴¹ For example, ENTEK Lithium Separators, a U.S. separator manufacturer, stated that "separators were not explicitly included in the definition of qualifying battery components" in the IRA and that inclusion of separators in the IRS rulemaking would reduce "ambiguity" and provide "clarity" for the entire supply chain.⁴² The IRS included separators in the final rulemaking, which was published two years after enactment of the IRA.⁴³ As suggested by Argonne and market participants, such time and ambiguity could have contributed to underinvestment.

Figure 14. Separator Planned Capacity

Source: Gohlke et al., Quantification of Commercially Planned Battery Component Supply; Barlock et al., Securing Critical Materials for the U.S. Electric Vehicle Industry. Note: CRS retrieved this figure from Gohlke et al. The bars represent projected capacity, the green line represents projected battery demand (see Figure 11), and the purple line represents projected cell announcements (see Figure 11). When projecting current collector production capacity, Gohlke et al. used announcements made by private companies and included adjustments for qualitative evaluations of how concrete the plans are. Gohlke et al. retrieved projected demand estimates from Barlock et al., Securing Critical Materials for the U.S. Electric Vehicle Industry, which models market data and policy conditions to estimate projected demand.

The data aggregation and modeling performed by Argonne and others indicate that the IIJA and IRA may be having an impact on investment announcements in some subsegments of the industry, such as cell assembly and electrode material manufacturing, but the investment impact on some other activities, such as separator and foil manufacturing, may be more limited.⁴⁴ More battery manufacturing facilities are operating, under construction, or planned in the United States than before the IRA and the IIJA were passed, but a wide range of preexisting trends (e.g., vehicle electrification, solar industry growth, other federal policies) and policies may have also contributed to this increase.⁴⁵

Policy Options for Congress

This section discusses past congressional actions related to battery manufacturing and discusses some policy options for Congress to consider.

Congress has enacted legislation that may have affected the development of a battery supply chain based in North America and other countries with which the United States has or has historically had a free trade agreement. Such legislation includes elements contained within broad statutes such as the (1) Energy Policy Act of 2005 (EPAct; P.L. 109-58); (2) Energy Independence and Security Act of 2007 (EISA; P.L. 110-140); (3) Emergency Economic Stabilization Act of 2008 (EESA; P.L. 110-343); (4) American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5); (5) the IIJA; and (6) the IRA.

While some advanced lithium-ion battery manufacturing activities, such as pack and module assembly, may have increased in the United States coinciding with the enactment of these laws, other U.S.-based activities might not have grown, potentially resulting in U.S. manufacturers' continued reliance on imports for battery cells and battery cell components. Reliance on imported components may result in certain congressional concerns related to supply chain resiliency continuing to go unaddressed in the industry.

Congress may continue to engage in oversight activities to assess the effect of implemented legislation. Alternatively, Congress may engage in legislative activities that could affect the industry. Such options might be broadly broken into four categories: (1) options that affect product demand, (2) options that address product supply, (3) options that affect trade and promote domestic manufacture, and (4) options that increase reporting on and visibility into the effect of policy.

Continued Oversight

Congress could continue oversight to determine the effect of previous legislative actions on the battery manufacturing industry. Congress might monitor the ways that the executive branch continues to implement the IIJA, the IRA, and other statutes and whether these priorities align with those of Congress. Congress might assess whether the existing efforts, such as the production tax credits implemented pursuant to the IRA, are achieving desired aims. Congress might also assess the sufficiency of the grants and loans authorized by the IIJA, both in effect and availability of funding. Stakeholder groups may have conflicting views, with continued oversight seen as reflecting policy stability or reflecting a shift in congressional focus. The extent to which these programs impact the budget and government expenditures may be a particular area of congressional interest.

Product Demand

Congress might address aspects of the lithium-ion battery manufacturing industry by affecting end-user demand for batteries. End-user demand for batteries is driven by battery consumers, such as EV manufacturers, renewable energy system manufacturers, and households. Congress could consider augmenting certain existing policies and programs related to demand for battery manufacturing, such as (1) EV purchaser tax credits, (2) energy tax credits, (3) domestic preference statutes, and (4) EV research and development programs.

EV Tax Credits

Modifying EV tax credits might support the battery manufacturing industry because EV manufacturers are one of the leading end-use purchasers of advanced batteries.⁴⁶ Tax credits for EVs were most recently modified by the IRA. Pursuant to Section 13401 of the IRA, EV purchasers are eligible to receive tax credits provided that the EV and the battery contained within it meet certain sourcing requirements, such as being assembled in North America with battery-active materials from the United States or certain other qualifying countries.

Congress has incrementally revised EV purchaser tax credits since their establishment in 2008. Section 13401 of the IRA, enacted in 2022, eliminated a previously established vehicle cap and created some sourcing and assembly requirements for EVs and their batteries. Specifically, the IRA requires that (1) qualifying EVs be assembled in North America; (2) certain percentages of a qualifying EV battery's component parts be manufactured or assembled in North America; (3) certain percentages of the EV battery's mineral inputs be sourced from the United States, be sourced from a country that has a free trade agreement with the United States, or be recycled in North America; and (4) none of the EV battery's component parts or critical minerals come from a foreign entity of concern.⁴⁷

The IRA did not include domestic sourcing requirements in tax code Section 45W, which allows businesses purchasing EVs to receive tax credits between $7,500 and $40,000 per vehicle.⁴⁸ In some cases, vehicle dealerships appear to have received the Section 45W credit for foreign-made EVs and passed the benefits of the credit to consumer lessees in the form of reduced down payments.⁴⁹ This circumstance would allow consumers to benefit from the EV tax credits when leasing foreign-made EVs, potentially undercutting domestic battery supply chains in the process.⁵⁰ Research from the National Bureau of Economic Research (NBER) found that this particular policy had "negative domestic benefits" for the U.S. economy.⁵¹

The IRA EV tax credit revisions might have shifted demand for EVs toward North American vehicle manufacturers, but it is unclear to what extent this extended to the U.S. battery manufacturing industry. The IRA does not require that EVs or their batteries be manufactured specifically in the United States to qualify for the tax credits.⁵² Some research has found that the share of EVs with U.S.-assembled batteries decreased after enactment of the IRA and the IIJA.⁵³ This research attributes the decrease to the lack of existing U.S. production capacity for batteries relative to the demand for batteries; the same research found that announced investment in such capacity was increasing.⁵⁴

Congress could attempt to pivot demand more toward U.S. manufacture of batteries by enacting United States-only assembly and mineral sourcing requirements rather than the general North American requirement established under the IRA. Such a change could pivot EV manufacturers' demand for batteries away from non-U.S. sources and toward U.S.-specific sources. Depending on the availability of such batteries in the near term, such a change could negatively affect the supply of EVs. It also might draw criticism or response from trading partners or other countries. Concerns of this type were raised when the tax credit was initially revised in the IRA.⁵⁵

Congress might consider expanding existing, or new, EV battery sourcing requirements to leased vehicles. Under Section 13401 of the IRA, commercial purchasers of EVs may qualify for an IRS Section 45W tax credit, which does not have the same sourcing requirements as the Section 30D credit.⁵⁶ Under Section 45W, commercial purchases of EVs may lease their purchased EV to customers at reduced prices, passing along the tax credit benefits for vehicles, including foreign-made vehicles. This differential treatment between Sections 45W and 30D might have influenced greater leasing of EVs after the passage of the IRA.⁵⁷ If Congress were to address this differential treatment, it could shift demand toward North American or U.S. sources of batteries, potentially benefiting domestic suppliers. Such a change might decrease commercial purchase of EVs in the short term, as the universe of vehicles eligible for the credit would likely decrease. Such a change could draw criticism or responses from trading partners, in part because the beneficiaries of the flexibility allowed by Section 45W leasing include foreign EV manufacturers.⁵⁸

Energy Tax Credits

Congress could abolish, further revise, or maintain certain energy tax credits. Pursuant to the IRA and other preexisting legislation, entities that invest in or produce from renewable or zero-emission energy sources may be eligible for tax credits under Internal Revenue Code Sections 45, 45Y, 48, and 48E.⁵⁹ Such credits might affect demand for batteries because batteries and battery energy storage are used in conjunction with certain renewable energy industries, such as solar power and wind power systems.⁶⁰ Similarly to Congress's treatment of the existing EV tax credits, it could consider adding U.S. or North American content requirements for batteries used in such energy systems. While certain bonus energy credits established by the IRA are contingent on domestic content, non-bonus amounts have no such requirements. While expanding such domestic content requirements to all such energy credit amounts might further pivot demand toward domestically produced batteries, it might increase costs for and result in delays in the renewable energy sector in the short term, as domestically produced batteries that satisfy the renewable industries' requirements may not be as widely available from domestic sources as they are from foreign sources.

Domestic Preference

Currently, federal agencies, states, municipal governments, schools, and other entities that use federal dollars to acquire goods must comply with "domestic preference statutes" that require a certain amount of U.S. sourcing of goods.⁶¹ Some agency rules pursuant to some of the domestic preference statutes may lack such requirements at the sub-subcomponent or subcomponent level.⁶² In some of these cases, such sub-subcomponents or subcomponents may include battery cells used in end products.⁶³ Additionally, existing domestic preference statutes often have waiver provisions, which have been utilized in some cases to reduce such requirements.⁶⁴ Should Congress seek domestic preference requirements and procurement that uses federal dollars to incentivize growth of the domestic battery supply chain, it could consider legislation that would direct agencies to issue updated domestic preference rulemakings that require cells, cell components, and battery grade materials to be domestically sourced when procured with federal dollars or contained within a product that is procured with federal dollars. Such domestic content requirement changes might increase demand for domestically manufactured batteries, strengthen integration between domestic supply chain participants, and increase costs of bus procurement, as batteries that meet required specifications may be less available in the United States than other parts of the world.

Product Supply

One way Congress may consider impacting the lithium-ion battery manufacturing industry is through legislation that would lower the cost to produce such batteries in the United States. Broadly, Congress could consider actions that would lower (1) the fixed costs and capital expenses of the industry and (2) the variable costs of the industry.

Fixed Costs and Capital

Fixed costs and capital expenses are longer term investments and costs, such as expenses on new factories, equipment, and research and development activities. Policies that might affect the fixed costs to produce batteries in the United States include (1) providing direct grants or loans for manufacturing facilities and (2) supporting research and development programs.

Investment Grants

Congress could consider abolishing, further revising, or maintaining certain investment grants for manufacturing facilities. ARRA authorized the Department of Energy (DOE) to award up to $2 billion in grants to "manufacturers of advanced battery systems and vehicle batteries that are produced in the United States, including advanced lithium ion batteries, hybrid electrical systems, component manufacturers, and software designers."⁶⁵ The IIJA further expands and specifies the funding, scope, and types of battery manufacturing activities eligible for grants. Section 40207 of the IIJA (42 U.S.C. §18741) authorizes approximately $6 billion in grants to demonstrate projects, construct new facilities, or expand existing facilities that support extracting, processing, manufacturing, or recycling battery minerals, battery materials, battery components, battery cells, and batteries.⁶⁶ Such grants authorized by ARRA and the IIJA might support the domestic battery manufacturing industry by directly subsidizing the fixed costs associated with capacity expansion. Congress could consider maintaining the remaining funds, increasing them, or decreasing them. Should Congress seek to make changes unrelated to the dollar amount, it could consider revising these programs by adding a statutory provision that would establish preference for grant applicants who have purchase or offtake agreements with other U.S. supply chain participants further up or down the supply chain. Such a provision might reduce uncertainty across the supply chain, strengthen integration between domestic participants in the supply chain, and contribute to harmonizing the cost structure up and down the domestic supply chain. Additionally, such a provision could contribute toward higher costs for consumers of batteries in the short term if domestic supply chain participants have higher costs than participants located abroad.

The results of the IIJA investment grants are unclear, as construction and development of such facilities have an extended time frame. For example, in 2024, DOE announced $3 billion of investments in battery manufacturing and mineral processing facilities pursuant to the IIJA; however, it may be several years before construction of these facilities begins and additional years before they begin commercial production. Data from Argonne show that it takes several years for a battery manufacturing facility to move from announcement, to construction, to actual operation.⁶⁷ Argonne suggests that uncertainty regarding availability of buyers and suppliers may contribute to varying levels of investment across the supply chain.⁶⁸ Further related to potential policy uncertainty and uncertainty of funding availability, in January 2025, President Trump issued an executive order and a memorandum that, depending on the details of implementation and potential judicial intervention, may limit awards for battery manufacturers pursuant to the IIJA.⁶⁹ Additionally, the FY2026 budget request reduces funding available for IIJA programs and specifically cites "battery makers" as entities that will receive fewer "taxpayer handouts."⁷⁰ Although it is unclear whether the executive branch will unilaterally withhold, cancel, or recapture battery manufacturing awards, and to what extent the FY2026 budget request will be enacted, such proposals to reduce authorized disbursements may contribute toward perceptions of general uncertainty among market participants and could contribute toward investment cancellations.

Research and Development

Congress could abolish, revise, or maintain legislation affecting the research and development of battery technology. Such research and development activities potentially decrease costs for the battery industry because the government is funding development of products, process improvements, and alternative materials that might eventually be commercialized by industry participants. Such research also may contribute toward diversification and resilience if it results in alternative or additional battery types. Congress has authorized, directed, and funded research and development for battery technology, including its safety, through different statutory and budgetary authorities. For example, Section 333(c) of the Federal Aviation Administration (FAA) Reauthorization Act of 2018 (FAARA; P.L. 115-254) directed the creation of a working group to study safety in the use and manufacturing of such batteries and to submit the findings to Congress. The U.S. Department of Transportation working group submitted its findings to Congress on December 8, 2023.⁷¹ Congress also provided research direction through the IIJA. Section 40208 of the IIJA amended Section 641 of the Energy Independence and Security Act of 2007 (P.L. 110-140) to authorize research on battery recycling technology. Sections 40111, 40112, and 40207 of the IIJA include research, reporting, and development provisions that might relate to the safety of lithium-ion batteries. For example, Section 40111 of the IIJA directs the Secretary of Energy to produce a report that contains lithium-ion battery safety considerations; DOE's Pacific Northwest National Laboratory published that report, which contains analysis of certain safety considerations related to lithium-ion batteries in March 2022.⁷²

Congress might consider additional legislation that relates to battery safety. In the 119^th Congress, the Setting Consumer Standards for Lithium-Ion Batteries Act (SCSLBA; S. 389) was ordered to be reported by the Senate Committee on Commerce, Science, and Transportation. A potential area for legislation might be manufacturing and technology aspects that could affect battery safety, an area not generally examined in prior legislation. Congress could consider legislation that would direct future research to consider manufacturing and technological innovations that may improve safety.

Variable Costs

Variable costs are costs that correlate with short-term changes in production levels, such as the costs of raw materials, labor, and utilities. Policies that might affect the variable costs of producing batteries in the United States include (1) tax credits for production of battery cells, modules, components, and minerals (2) and workforce development.

Production Tax Credits

Congress could abolish, revise, or maintain the production tax credits for battery cells, battery modules, electrode active materials, and certain critical minerals. Tax credits of this type were enacted under Section 13502 of the IRA.⁷³ Section 13502 of the IRA established tax credits for battery cells and battery modules, which are dollar amounts per megawatts of the cell or the module, and credits for electrode active materials and critical minerals, which are equal to 10% of applicable production costs.⁷⁴ The Section 13502 tax credits were codified under Section 45X of the Internal Revenue Code.⁷⁵ Such credits might reduce the variable cost of producing batteries for industry participants because they directly rebate the cost of production back to the firm in the form of tax obligation reduction. Congress may consider the scope, specificity, and size of such credits.

IRS rulemakings have identified a wide range of supply-related manufacturing costs that would qualify for credits, including the costs of producing certain components that are not explicitly listed in the IRA.⁷⁶ For example, the IRS final rulemaking includes cathode current collectors within "electrode active materials" despite statute not listing them explicitly and despite literature generally not considering them active materials. Additionally, the rulemaking also considers separators as "electrode active materials," although statute does not list them explicitly, and CRS did not identify any scientific literature that considers them electrodes. This broad interpretation of Section 13502 may alleviate some potential concerns mentioned by Argonne regarding potential underinvestment in current collector and separator manufacturing capacity. Congress might consider whether the IRS's interpretation of the IRA is consistent with congressional intent and may consider legislation that either reinforces or contravenes the IRS's interpretation.

Congress could explicitly broaden the explicit scope of the IRA tax credits to provide additional certainty on which battery components are covered by the IRA battery production tax credits. Specifically, Congress could add specificity to the IRA production subsidy language to codify that separators and cathode current collectors for use in advanced batteries qualify for the production subsidies in the same way the other explicitly listed components qualify, consistent with the IRS rulemaking. Such a change might insulate the program from changes that might occur in the executive branch over time. This codification could reduce uncertainty and provide more explicit language for the totality of the midstream segment, which might increase investment in certain areas that might be underinvested in, such as separators and current collectors. Such a change could raise concerns regarding U.S. commitments to international free trade agreements that attempt to limit subsidies. Additionally, the expansion of such subsidies may have a budgetary impact.

Another potential impact to specifying separators as eligible for funding is that doing so could favor a certain type of battery. Separators are not required for solid-state batteries, for example, so making separators eligible for such funding could tilt the market away from solid-state battery innovation because non-solid-state batteries would be further subsidized. The inclusion or exclusion of certain components could be seen as technology specific should not all technologies use all components. Congress might communicate to the IRS whether such inclusions or exclusions are consistent with its intent regarding the components included in Section 45X.

Workforce Development

Congress could consider taking action to address the labor needs of the battery manufacturing industry. The W.E. Upjohn Institute for Employment Research forecasts that 310,000 workers—nearly a 5-fold growth from 2023 levels—will be required by 2030 to support the predicted growth in lithium-ion battery manufacturing.⁷⁷ Additionally, the labor needs of each subprocess (e.g., component manufacturing or cell or pack assembly) might vary in quantity and quality, and the labor requirements associated with developing domestic lithium-ion battery manufacturing supply chain may change depending on which portion is growing.⁷⁸

Congress might consider augmenting or creating programs that could expand the labor pool for the lithium-ion battery manufacturing industry. In 2023, the Employment Training Administration (ETA) announced awards of $16 million in new Critical Sectors Job Quality Grants to support training in specified critical sectors.⁷⁹ The National Energy Technology Laboratory also has a Battery Workforce Initiative created to "speed up the development of high-quality training" for the battery industry.⁸⁰ Congress could use its oversight authority to request updates from ETA and DOE on their proposed training programs.⁸¹ Congress could also consider legislation that would establish training requirements in battery manufacturing projects that receive certain types of federal funding. Such training could decrease manufacturing costs, increase productivity, and decrease uncertainty, which may spur additional investment in battery manufacturing from the private sector. Such training could also limit labor dislocations that might occur as the industry potentially continues to pivot away from lead-acid batteries and toward lithium-ion batteries. Such training may require additional costs to succeed and could have a budgetary impact on private and public organizations.

Trade Protections

Congress could consider increasing, reducing, or maintaining certain trade barriers designed to protect the domestic battery manufacturing supply chain. During the Biden Administration, the executive branch applied tariffs to imported batteries and battery parts originating from China pursuant to broad statutory authorities in Section 301 of the Trade Act of 1974.⁸² During the Trump Administrations, the executive branch implemented higher tariffs on a wider range of goods, including batteries.⁸³ Economists tend to regard tariffs as inefficient, but tariffs designed to protect nascent industries where domestic firms are underdeveloped compared with global competitors can sometimes provide more benefits relative to tariffs on mature industries.⁸⁴ Congress could direct through statute, or request through oversight, increased tariffs for lithium-ion batteries, parts of lithium batteries, and products that contain batteries. While Congress has delegated most tariff setting to the executive branch, it could consider legislation to specify tariffs at the HTS level in statute.⁸⁵ Such a policy might pivot demand toward domestic producers of batteries and battery parts rather than imported sources, which could spur additional investments in the domestic battery manufacturing supply chain. It might also increase costs for consumers of batteries, such as EV manufacturers and grid storage companies, particularly in the short run. Additionally, such tariffs could pivot consumers toward products directly unaffected by the tariffs, reducing consumer demand for batteries, and may trigger retaliatory actions by trading partners. Making the tariff increase temporary and focused on nurturing a nascent industry could limit some of these potential impacts.

Visibility

Congress could consider abolishing, revising, or maintaining federal programs that provide visibility into the lithium-ion battery manufacturing industry. High quality and detailed data may help evaluate the effects of congressional action related to the domestic battery manufacturing industry. As previously illustrated in the "Historical Trends" section of this report, visibility into the domestic advanced lithium-ion energy storage battery manufacturing industry is limited; to a lesser degree, visibility into imports and exports of lithium-ion storage batteries is also limited. For example, there is no authoritative and longitudinal federal source on domestic employment and production in the advanced lithium-ion battery manufacturing industry. Additionally, import and export data group certain information together in ways that may limit their utility. The federal agencies that collect and publish data on prices, sales, employment, production, imports, and exports of batteries do so at an aggregation, periodicity, or quality that may not provide sufficient visibility to monitor the advanced lithium-ion energy storage battery industry. The data that could be evaluated for changes include (1) domestic manufacturing data and (2) import and export data.

Domestic Manufacturing Data

To potentially gain improved visibility into the domestic battery industry, Congress might consider utilizing existing statistical agencies, regulatory agencies, or some combination thereof. The statistical agencies likely most applicable for such purposes include BLS, Census, and the Energy Information Agency (EIA). BLS collects and publishes data on prices, employment, and wages broken out by sector.⁸⁶ Census publishes and collects data on sales, establishments, and shipments broken out by sector.⁸⁷ EIA collects and publishes information on the energy sector.⁸⁸ Congress could use its oversight powers to request that BLS, Census, and EIA be more responsive to the evolving battery manufacturing industry and ensure data are published at a more detailed level. Congress could also, as it has in the past for other topic areas,⁸⁹ create mandatory special data collections, such as for the advanced battery industry, for BLS, Census, or EIA to implement; the success of such data collection may depend on the availability of appropriations and the quality of industry reporting. Such changes might add costs to the operations of federal agencies that implement these surveys and increase costs to businesses that must respond to them.

Import and Export Data

Congress may consider options that would affect U.S. trade data collection and publication. The U.S. International Trade Commission (USITC), Customs and Border Protection (CBP), and Census could support improved data collection and publication for imports and exports of advanced lithium-ion energy storage batteries. CBP systematically tracks all goods that legally enter or exit the United States. Census publishes these data to the public, but the classification detail they use for batteries might be insufficient for full supply chain visibility. The classification system used by CBP—the HTS—is maintained by USITC and may not have the detail necessary for full supply chain visibility. For example, there is no classifying information within the HTS energy storage battery codes on how many battery cells a finished battery contains; such information is necessary to distinguish whether a battery is "advanced" and could help indicate the end use of the battery. Additionally, the classification of parts for non-lead-acid energy storage batteries groups all parts and chemistries together, but there are important distinctions between some of those parts and chemistries. Similarly, the USITC and CBP classifying battery cells as parts to a battery rather than a battery itself or a separate standalone classification obscures certain important information. Furthermore, although the HTS contains classifications for a range of upstream minerals and metals, the current classifications may make systematically identifying battery grade electrode materials difficult.

Congress could consider addressing some of the aforementioned visibility gaps by seeking to modify the HTS. Congress could, through oversight or statute, direct USITC to (1) update its classification system to further classify or distinguish lithium-ion energy storage batteries based on some measure of size by creating new HTS codes that correlate to the quantity of cells or estimated power capacity; (2) create new HTS codes that distinguish the chemistry type of energy storage battery parts; (3) create separate classification HTS codes specifically for energy storage battery parts not elsewhere specified or included; and (4) create certain custom classification categories of interest and direct that data for these categories be furnished by CBP and published by Census at a more detailed level. While chapter 99 of the HTS contains some customized detailed battery and mineral classifications that may be of interest to Congress, many of those classifications have expired, and the data classified under those detailed chapter 99 categories are not publicly published by Census under such detailed classifications. With potential new classifications, U.S. trade data published by Census might provide more visibility into the changing global and domestic value chains for batteries. Such changes might add costs to the operations of federal agencies that implement these programs, such as USITC, CBP, and Census, and increase costs to businesses that must declare accurate information to CBP.

Appendix. Key Terms

Footnotes

1.	For a definition of advanced lithium-ion batteries, among other terms used in this report, see the Appendix.
2.	This report does not address other energy storage tools, such as hydrostatic power and hydrogen, used in some of these sectors.
3.	Yan Zhou et al., Lithium-Ion Battery Supply Chain for E-Drive Vehicles in the United States: 2010-2020, Argonne National Laboratory (Argonne), March, 2021, https://publications.anl.gov/anlpubs/2021/04/167369.pdf; Ahmad Pesaran et al., North American Lithium-Ion Battery Supply Chain Database Development – Phase II, National Renewable Energy Laboratory, December 5, 2022, https://www.nrel.gov/docs/fy23osti/85610.pdf; Rebecca Bellan, "Automakers Have Battery Anxiety, So They're Taking Control of the Supply," TechCrunch, July 23, 2021, https://techcrunch.com/2021/07/23/automakers-have-battery-anxiety-so-theyre-taking-control-of-the-supply/; Bellan, "Tracking the EV Battery Factory Construction Boom Across North America," TechCrunch, February 6, 2025, https://techcrunch.com/2025/02/06/tracking-the-ev-battery-factory-construction-boom-across-north-america/; Nate Martinez, "GM Begins Work at Brownstown Lithium Ion Battery Plant; Set for 2010 Opening," MotorTrend, August 13, 2009, https://www.motortrend.com/news/gm-begins-work-at-brownstown-lithium-ion-battery-plant-set-for-2010-opening-5015/; PR NewsWire, "LG Chem's Holland Plant Accelerates Battery Production," October 21, 2015, https://www.prnewswire.com/news-releases/lg-chems-holland-plant-accelerates-battery-production-300163934.html; WardsAuto, "LG Chem Details Cell-Making Process at Michigan Plant," November 3, 2015, https://www.wardsauto.com/industry/lg-chem-details-cell-making-process-at-michigan-plant; Georgia Wilson, "Timeline: Tesla's Construction of Gigafactories," Manufacturing Digital, May 10, 2021, https://manufacturingdigital.com/digital-factory/timeline-teslas-construction-gigafactories.
4.	Based on CRS analysis of employment from the Bureau of Labor Statistics (BLS), sales data from the Census Bureau, and gross domestic product from the Bureau of Economic Analysis (BEA).
5.	As measured by nominal dollar value.
6.	Publicly available data date as far back as 2009.
7.	CRS calculations based on U.S. Import and Export Merchandise trade statistics from the Census Bureau's USA Trade Online data tool.
8.	Ibid.
9.	U.S. International Trade Commission (USITC), "Chapter 85: Electrical Machinery and Equipment and Parts Thereof; Sound Recorders and Reproducers, Television Image and Sound Recorders and Reproducers, and Parts and Accessories of Such Articles," in Harmonized Tariff Schedule (HTS) of the United States (2025), Revision 10 (April 2025), https://hts.usitc.gov/; and David Coffin and Jeff Horowitz, "The Supply Chain for Electric Vehicle Batteries," USITC Journal of International Commerce and Economics (December 2018), https://www.usitc.gov/publications/332/journals/the_supply_chain_for_electric_vehicle_batteries_0.pdf.
10.	CRS calculations using U.S. Import and Export Merchandise trade statistics from the Census Bureau's USA Trade Online data tool.
11.	See, for example, Varun Sivaram et al., Winning the Battery Race: How the United States Can Leapfrog China to Dominate Next-Generation Battery Technologies, Carnegie Endowment for International Peace, October 21, 2024, https://carnegieendowment.org/research/2024/10/winning-the-battery-race-how-the-united-states-can-leapfrog-china-to-dominate-next-generation-battery-technologies?lang=en.
12.	Census Bureau, "Guide to the U.S. International Trade Statistical Program," https://www.census.gov/foreign-trade/guide/sec2.html.
13.	Census Bureau, "Guide to the U.S. International Trade Statistical Program."
14.	Trade Data Monitor, "Mexico Imports from United States," accessed October 25, 2024, https://tradedatamonitor.com/.
15.	Donald Chung et al., Automotive Lithium-Ion Cell Manufacturing: Regional Cost Structures and Supply Chain Considerations, Clean Energy Manufacturing Analysis Center, April 2016, https://www.nrel.gov/docs/fy16osti/66086.pdf; and Bloomberg New Energy Finance, "Long-Term Electric Vehicle Outlook 2024—Data," June, 2024.
16.	Abigail Cooke et al., Cheap Imports and the Loss of U.S. Manufacturing Jobs, Census Bureau, Center for Economic Studies, Working Paper 16-05, https://www2.census.gov/ces/wp/2016/CES-WP-16-05.pdf; Susan N. Houseman, Understanding the Decline of U.S. Manufacturing Employment, W.E. Upjohn Institute for Employment Research, Working Paper 18-287, June 7, 2018, https://research.upjohn.org/cgi/viewcontent.cgi?article=1305&context=up_workingpapers; Mary Amiti et al., How Did China's WTO Entry Affect U.S. Prices?, National Bureau of Economic Research (NBER), Working Paper 13487, June 2017, https://www.nber.org/system/files/working_papers/w23487/w23487.pdf.
17.	For discussion of battery industry subsidies, see "Production Tax Credits."
18.	BloombergNEF, "Long-Term Electric Vehicle Outlook 2024—Data."
19.	CRS analysis of data covering storage battery manufacturing from the dataset "U.Real Gross Output by Industry – Detail Level" of the BEA from BEA's Interactive Data Tables tool for Gross Domestic Product by Industry.
20.	Ibid.
21.	CRS analysis of sales data from Census Bureau, "Economic Surveys: AM1631VS101 Annual Survey of Manufactures: Value of Products Shipments: Value of Shipments for Product Classes: 2016, 2015, 2014 and 2013," accessed January 21, 2025, https://data.census.gov/table?d=ECNSVY+Annual+Survey+of+Manufactures+Annual+Survey+of+Manufactures+Value&p=335911:3359111:3359114:3359118; and Census Bureau, "Economic Census: EC1700NAPCSPRDINDAll Sectors: Products by Industry for the U.S.: 2017," accessed January 21, 2025, https://data.census.gov/table?g=010XX00US&y=2017&d=ECN+Core+Statistics+Economic+Census&n=00&napcs=2030050000:2030075000:2030075003:2030075006:2030100000:2030125000.
22.	Ibid; total storage battery sales in 2013 were approximately $6.2 billion and approximately $6.6 billion in 2017.
23.	This 2012 estimate was retrieved from BLS's relative importance tables published in 2018. The Census Bureau does not publish this 2012 estimate to the public. CRS retrieved an approximation of it from BLS's relative importance publication, which is published and used with a five-year and one-month lag; see BLS, "Archived PPI Commodity Data Relative Importance and Seasonal Factor Tables," 2019, https://www.bls.gov/ppi/tables/commodity-special-requests.htm; and BLS, "Producer Price Index News Release," February 15, 2018, https://www.bls.gov/news.release/archives/ppi_02152018.htm.
24.	Calculated by CRS by taking total sales reported by the Census Bureau under "manufacturing of storage batteries (excluding lead acid)" and dividing that figure by the sum of total sales reported by the Census Bureau under all completed storage battery types.
25.	Martinez, "GM Begins Work at Brownstown Lithium Ion Battery Plant; Set for 2010 Opening"; PR NewsWire, "LG Chem's Holland Plant Accelerates Battery Production"; WardsAuto, "LG Chem Details Cell-Making Process at Michigan Plant"; Wilson, "Timeline: Tesla's Construction of Gigafactories"; Zhou et al., Lithium-Ion Battery Supply Chain for E-Drive Vehicles in the United States: 2010-2020.
26.	A caveat to this conclusion would be if an establishment classified as something other than a manufacturer were systematically making substantial transformations to imported batteries and exporting them as domestic exports. Such an activity might not be captured by the Annual Survey of Manufactures and could be another explanation for the concurrent trends. CRS did not identify any such cases from secondary sources.
27.	Because the employment data published by BLS are not specific to a type of battery, other sources may be helpful in understanding how advanced lithium-ion energy storage batteries may or may not be contributing to these broader employment growth trends. Estimates for lithium-ion energy storage battery manufacturing employment's share of total battery manufacturing employment range from 16% to 39%.
28.	CRS analysis of data from Current Employment Statistics Survey (National) covering North American Industry Classification System (NAICS) code 33591 from BLS's One Screen Data Tool.
29.	Ibid.
30.	Ibid.
31.	Sarah Scott and Robert Ireland, Lithium-Ion Battery Materials for Electric Vehicles and Their Global Value Chains, USITC, Working Paper ID-068, June 2020, https://www.usitc.gov/publications/332/working_papers/gvc_overview_scott_ireland_508_final_061120.pdf; Coffin and Horowitz, "The Supply Chain for Electric Vehicle Batteries"; Department of Energy (DOE), 2021-2024 Four-Year Review of Supply Chains for the Advanced Batteries Sector, December 2024, https://www.energy.gov/sites/default/files/2024-12/20212024-Four%20Year%20Review%20of%20Supply%20Chains%20for%20the%20Advanced%20Batteries%20Sector.pdf; Jon Bokrantz et al., "Unravelling Supply Chain Complexity in Maintenance Operations of Battery Production," Production Planning & Control, vol. 1, no. 22 (October 2024), https://doi.org/10.1080/09537287.2024.2414334; Johann-Philip Abramowski et al., "Building Blocks for an Automated Quality Assurance Concept in High Throughput Battery Cell Manufacturing," Procedia CIRP, vol. 120 (2023), https://doi.org/10.1016/j.procir.2023.09.097; and Jacob Wessel et al., "Traceability in Battery Cell Production," Energy Technology, vol. 11, no. 5 (May 2023), https://onlinelibrary.wiley.com/doi/epdf/10.1002/ente.202200911.
32.	For definitions of battery cell and battery cell components, among other terms used in this report, see the Appendix.
33.	For definitions of battery pack and battery management system, among other terms used in this report, see the Appendix.
34.	Gohlke et al., Quantification of Commercially Planned Battery Component Supply in North America Through 2035.
35.	EDF, U.S. Electric Vehicle Battery Manufacturing on Track to Meet Demand, December 2023, https://www.edf.org/sites/default/files/2023-12/EDF%20Analysis%20on%20US%20Battery%20Capacity%2012.13.23%20final%20v3.pdf.
36.	Gohlke et al., Quantification of Commercially Planned Battery Component Supply in North America Through 2035.
37.	Jakob Fleischmann, The Battery Cell Component Opportunity in Europe and North America, McKinsey & Company, Battery Accelerator Team and Automotive & Assembly Practice, April 18, 2024, https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/the-battery-cell-component-opportunity-in-europe-and-north-america#/.
38.	Varun Sivaram et al., Winning the Battery Race: How the United States Can Leapfrog China to Dominate Next-Generation Battery Technologies, Carnegie Endowment for International Peace, October 2024, https://carnegie-production-assets.s3.amazonaws.com/static/files/Sivaram%20Gordon%20-%20Battery%20Race-2024.pdf.
39.	Ibid.
40.	Internal Revenue Service (IRS), "Section 45X Advanced Manufacturing Production Credit," 88 Federal Register 86844, December, 15, 2023, https://www.federalregister.gov/documents/2023/12/15/2023-27498/section-45x-advanced-manufacturing-production-credit; and IRS, "Advanced Manufacturing Production Credit," 89 Federal Register 85798, October 28, 2024, https://www.federalregister.gov/documents/2024/10/28/2024-24840/advanced-manufacturing-production-credit.
41.	IRS, "Advanced Manufacturing Production Credit," 89 Federal Register 85798; ENTEK Lithium Separators LLC (ENTEK), "ENTEK Notice 2022-47 Comment Letter," February 2, 2023, https://www.regulations.gov/comment/IRS-2022-0021-0264; and IRS, Notice 2022-47, https://www.regulations.gov/document/IRS-2022-0021-0001/comment?filter=separator.
42.	ENTEK, "Comments on IRS REG-107423-23," February 13, 2024, https://www.regulations.gov/comment/IRS-2023-0063-0103.
43.	IRS, "Section 45X Advanced Manufacturing Production Credit," 88 Federal Register 86844; and IRS, "Advanced Manufacturing Production Credit," 89 Federal Register 85798.
44.	Gohlke et al., Quantification of Commercially Planned Battery Component Supply in North America Through 2035.
45.	Ibid.
46.	International Energy Agency (IEA), Batteries and Secure Energy Transitions, 2024, https://www.iea.org/reports/batteries-and-secure-energy-transitions/executive-summary.
47.	P.L. 117-169; and CRS In Focus IF12603, The Tax Credit Exception for Leased Electric Vehicles, by Nicholas E. Buffie.
48.	CRS In Focus IF12600, Clean Vehicle Tax Credits, by Donald J. Marples and Nicholas E. Buffie; and CRS In Focus IF12603, The Tax Credit Exception for Leased Electric Vehicles, by Nicholas E. Buffie.
49.	CRS In Focus IF12603, The Tax Credit Exception for Leased Electric Vehicles, by Nicholas E. Buffie.
50.	Ibid.
51.	Hunt Allcott et al., The Effects of "Buy American": Electric Vehicles and the Inflation Reduction Act, NBER, December 2024, http://www.nber.org/papers/w33032.
52.	The United States is not the only location that can satisfy the requirements. For more information, see Chad P. Bown, Industrial Policy for Electric Vehicle Supply Chains and the US-EU Fight over the Inflation Reduction Act, Peterson Institute for International Economics, May 2023, https://www.piie.com/sites/default/files/2023-05/wp23-1.pdf; and Lee Harris, "Union Leader: Stellantis Will Send Electric-Vehicle Jobs to Mexico," American Prospect, December 14, 2022, https://prospect.org/labor/stellantis-will-send-electric-vehicle-jobs-to-mexico/.
53.	David Coffin and Jeff Walling, "Electrifying the Global BEV Landscape: Top Suppliers and Consumers of BEVs and BEV Batteries," USITC Journal of International Commerce and Economics (June 2024), https://www.usitc.gov/publications/332/journals/jice_electrifying_the_global_bev_landscape.pdf.
54.	Ibid.
55.	Christian Scheinert, "EU's Response to the US Inflation Reduction Act (IRA)," European Parliament, Directorate-General for Internal Policies, Policy Department for Economic, Scientific, and Quality of Life Policies, June 6, 2023, https://www.europarl.europa.eu/RegData/etudes/IDAN/2023/740087/IPOL_IDA(2023)740087_EN.pdf; and Sandrine Levasseur, "A Two-Year Assessment of the IRA's Subsidies to the Electric Vehicles in the US: Uptake and Assembly Plants for Batteries and EVs," Asia and the Global Economy, vol. 5, no. 1 (December 18, 2024), https://doi.org/10.1016/j.aglobe.2024.100102.
56.	"Section" in this case refers to Internal Revenue Code sections. The §30D and §45W credits are described in 26 U.S.C. §30D and 26 U.S.C. §45W, respectively.
57.	Allcott et al., The Effects of "Buy American."
58.	Allcott et al., The Effects of "Buy American"; Levasseur, "A Two-Year Assessment of the IRA's Subsidies to the Electric Vehicles in the US"; and CRS In Focus IF12603, The Tax Credit Exception for Leased Electric Vehicles, by Nicholas E. Buffie.
59.	CRS In Focus IF10479, The Energy Credit or Energy Investment Tax Credit (ITC), by Molly F. Sherlock; and CRS Report R48358, Domestic Content Requirements for Electricity Tax Credits in the Inflation Reduction Act (IRA), by Nicholas E. Buffie.
60.	IEA, Batteries and Secure Energy Transitions, 2024; CRS In Focus IF10479, The Energy Credit or Energy Investment Tax Credit (ITC), by Molly F. Sherlock; CRS Report R48358, Domestic Content Requirements for Electricity Tax Credits in the Inflation Reduction Act (IRA), by Nicholas E. Buffie; and CRS Insight IN12003, Inflation Reduction Act of 2022: Incentives for Clean Transportation, by Melissa N. Diaz.
61.	Section 70923 of P.L. 117-58; CRS Report R46748, The Buy American Act and Other Federal Procurement Domestic Content Restrictions, by David H. Carpenter and Brandon J. Murrill; CRS Insight IN12230, OMB Issues Final Guidance on "Buy America" Domestic Preference Requirements.
62.	49 C.F.R. §5323(j); and 2 U.S.C. §184.
63.	CRS In Focus IF10941, Buy America and the Electric Bus Market, by Bill Canis and William J. Mallett.
64.	See, for example, an Environmental Protection Agency (EPA) decision to exclude school buses from such a requirement. Joseph Goffman, Decision Memorandum, EPA, July 29, 2022, https://www.epa.gov/system/files/documents/2022-08/CSB%20Adj%20Period%20Waiver%20Decision%20Document.pdf; EPA, Questions and Answers: 2023 Clean School Bus (CSB) Rebate Program, June 2024, https://www.epa.gov/system/files/documents/2024-06/fy23-csb-rebate-questions-answers-2024-06-20_0.pdf.
65.	Title II of P.L. 111-5.
66.	P.L. 117-58.
67.	Gohlke et al., Quantification of Commercially Planned Battery Component Supply in North America Through 2035.
68.	Ibid.
69.	Executive Order 14154 of January 20, 2025, "Unleashing American Energy," 90 Federal Register 8353, January 27, 2025, https://www.federalregister.gov/documents/2025/01/29/2025-01956/unleashing-american-energy; White House, "Memorandum to the Heads of Departments and Agencies," presidential memorandum of January 21, 2025, https://www.whitehouse.gov/briefings-statements/2025/01/omb-memo-m-25-11/; Appropriations Committee Democrats, Background on Unlawful Impoundment in President Trump's Executive Order, January 29, 2025, https://democrats-appropriations.house.gov/news/fact-sheets/background-unlawful-impoundment-president-trumps-executive-orders; Kate Magill, "Trump Administration Ordered to Resume IIJA, IRA Funding," ConstructionDive, April 17, 2025, https://www.constructiondive.com/news/judge-orders-trump-reinstate-iija-ira-funding/745582.
70.	Russell T. Vought, Fiscal Year 2026 Discretionary Budget Request, May 2, 2025, https://www.whitehouse.gov/wp-content/uploads/2025/05/Fiscal-Year-2026-Discretionary-Budget-Request.pdf.
71.	Lithium Battery Safety Working Group, Report to Congress—Section 333(c) of the Federal Aviation Administration Reauthorization Act of 2018, DOT, December 8, 2023, https://www.phmsa.dot.gov/sites/phmsa.dot.gov/files/2023-12/Report%20to%20Congress%20on%20Lithium%20Battery%20Safety%20Working%20Group.pdf.
72.	DOE, Pacific Northwest National Laboratory, Study of Codes and Standards for Stationary Energy Storage Systems, March 2022, https://www.pnnl.gov/main/publications/external/technical_reports/PNNL-32789.pdf.
73.	P.L. 117-169; and CRS In Focus IF12809, The Section 45X Advanced Manufacturing Production Credit, by Nicholas E. Buffie.
74.	Ibid.
75.	26 U.S.C. §45X.
76.	CRS In Focus IF12809, The Section 45X Advanced Manufacturing Production Credit, by Nicholas E. Buffie; Crux, Final Guidance Released for 45X Advanced Manufacturing PTCs, October 24, 2024, https://www.cruxclimate.com/insights/45x-final-guidance; and IRS, "Advanced Manufacturing Production Credit," 89 Federal Register 85798.
77.	Erik Vasilauskas et al., Projecting the Demand for Workers in the Production of Lithium-Ion Batteries in the United States, W.E. Upjohn Institute for Employment Research, May 6, 2024, https://research.upjohn.org/reports/304/.
78.	Vasilauskas et al., Projecting the Demand for Workers; Turner Cotterman et al., "The Transition to Electrified Vehicles: Evaluating the Labor Demand of Manufacturing Conventional Versus Battery Electric Vehicle Powertrains," Energy Policy, vol. 188 (March 2024), https://doi.org/10.1016/j.enpol.2024.114064; and Anh Bui and Peter Slowik, Powering the Future: Assessment of U.S. Light-Duty Vehicle Battery Manufacturing Jobs by 2032, International Council on Clean Transportation, Working Paper 255, January 2025, https://theicct.org/wp-content/uploads/2024/12/ID-255-%E2%80%93-Battery-jobs_working-paper_final.pdf.
79.	U.S. Department of Labor (DOL), Critical Sectors Job Quality Grants, 2023, https://www.dol.gov/sites/dolgov/files/general/grants/FY2023CriticalSectorsJobQuality.pdf; and DOL, "Biden-Harris Administration Awards $16M to Improve Job Quality, Expand Access to Good Jobs in Critical Sectors, Including Care, Climate Resilience, Hospitality," September 28, 2023, https://www.dol.gov/newsroom/releases/eta/eta20230928-1.
80.	DOE, National Energy Technology Laboratory, "Battery Workforce Initiative," https://netl.doe.gov/bwi.
81.	DOL, "Employment and Training Administration," https://www.dol.gov/agencies/eta.
82.	White House, "Fact Sheet: President Biden Takes Action to Protect American Workers and Businesses from China's Unfair Trade Practices," press release, May 14, 2024, https://web.archive.org/web/20241231210411/https://www.whitehouse.gov/briefing-room/statements-releases/2024/05/14/fact-sheet-president-biden-takes-action-to-protect-american-workers-and-businesses-from-chinas-unfair-trade-practices/.
83.	White House, "Fact Sheet: President Donald J. Trump Declares National Emergency to Increase Our Competitive Edge, Protect Our Sovereignty, and Strengthen Our National Economic Security," April 2, 2025, https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-president-donald-j-trump-declares-national-emergency-to-increase-our-competitive-edge-protect-our-sovereignty-and-strengthen-our-national-and-economic-security/.
84.	Marc J. Melitz, "When and How Should Infant Industries Be Protected," Journal of International Economics, vol. 66 (2005), pp. 177-196, https://scholar.harvard.edu/files/melitz/files/infant_jie.pdf.
85.	S. 5564 (118th Congress); H.R. 8982 (117th Congress); S. 1485 (110th Congress).
86.	BLS, "Overview of BLS Statistics," September 1, 2020, https://www.bls.gov/bls/overview.htm.
87.	Census Bureau, "Topics," October 16, 2024, https://www.census.gov/topics.html.
88.	U.S. Energy Information Administration (EIA), "About EIA," https://www.eia.gov/about/.
89.	For example, see S. 2629 (117th Congress).