US blacklists Chinese battery giant CATL for China military links

A Chinese tech giant has been added to a US military blacklist in a shock move that could have huge ramifications in Australia.

The United States Department of Defence has added Chinese battery manufacturing giant Contemporary Amperex Technology (CATL) to its list of companies linked to China’s military.

CATL is the world’s largest electric vehicle (EV) battery manufacturer, currently controlling 37 per cent of the world’s battery market.

That market share far outpaces Chinese automaker Build Your Dreams (BYD) which holds a much less 17 per cent share.

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CATL, based in Fujian, China, supplies batteries to global automakers in China and abroad including Tesla, Ford, Volkswagen and BMW.

The US blacklisting follows a longstanding policy under the “Section 126H list” and is updated annually.

The list serves as a warning to US companies about the risks of doing business with Chinese companies.

It currently contains 134 companies, including chip maker Changxin Memory Technologies, Quectel Wireless and drone maker Autel Robotics.

The move does not mean an immediate ban but will add pressure to the US Treasury Department to sanction the firms.

CATL is a major supplier of lithium iron phosphate (LFP) batteries to Tesla.

Tesla has been exporting CATL battery vehicles to markets such as Europe, Canada and Australia.

CATL is set to supply battery cells and packs to Tesla’s Shanghai plant for Megapack, its energy storage product. Picture: AFP

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Morninstar analyst Seth Goldstein said no near-term impact was expected for Tesla as a result of the Pentagon’s finding, however “being potentially excluded from military contracts may give everyone considering a partnership with CATL a pause”.

Goldstein said he expected Tesla to continue its partnerships with CATL and ending those ties could be “potentially worse than any political ramifications in the US”.

However, he said Musk’s relationship with incoming President Donald Trump might allow Tesla a waiver for potential future restrictions.

It’s uncertain what the move means for US automaker Ford who recently revealed it would invest $2bn USD to build a battery plant in Michigan, with plans to license technology from CATL.

Ford recently revealed it would invest $2bn USD to build a battery plant in Michigan, with plans to license technology from CATL. Picture: AFP

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Ford has been contacted for comment.

In response, CATL has denied the allegations, calling the US decision a “mistake.”

A spokesperson for the company said, “we have never engaged in any military-related business or activities”.

US Chinese embassy spokesperson Liu Pengyu added that the move “violates the market competition principles and international economic and trade rules” and “undermines the confidence of foreign companies in investing and operating in the United States.”

The addition of CATL to the Pentagon’s blacklist further escalates the ongoing tech rivalry between Washington and Beijing.

Last week, Beijing announced plans to curb the export of technology used to extract and process minerals for the global EV industry.

The decision by the Pentagon further escalates the ongoing tech rivalry between Washington and Beijing. Picture: AFP

The move also follows the Biden administration proposing a ban on Chinese software and hardware from cars sold in the US.

Chinese Ministry of Foreign Affairs spokesperson Guo Jiakun condemned the US to “immediately correct its wrong practices and lift the illegal unilateral sanctions and long-arm jurisdiction on Chinese companies.”

“China consistently and firmly opposes the US overstretching the concept of national security, creating discriminatory lists under various pretexts, and unwarrantedly suppressing Chinese companies, hindering China’s high-quality development,” Guo said.

A visitor looks at a Shenxing Plus battery pack for electric vehicles in the showroom at the headquarters of Chinese EV battery maker CATL. Picture: AFP

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What this means for Australia is uncertain but the Pentagon’s decision reflects growing concerns over national security and foreign influence.

Given Australia’s reliance on Chinese-made battery technology, the decision could prompt Australia to re-evaluate its strategies.

EV Central editor and motoring expert Toby Hagon said “it doesn’t look like” the Pentagon’s move will impact vehicle imports, “at least initially”.

“But clearly it’s something some of the world’s largest car makers will be watching closely.” he said.

Originally published as US blacklists Chinese battery giant CATL for China military links