Pentagon adds world’s largest EV battery maker to blacklist, posing problems for Tesla, Ford, and GM

A Tesla electric vehicle peeks out from behind a wall where it is charging in a stall.
Courtesy: Priscilla Du Preez 🇨🇦 on Unsplash

The U.S. Department of Defense has added the world’s largest producer of electric vehicle (EV) batteries to a list of companies with purported ties to China’s military, potentially muddling its relationship with U.S. auto titans including Tesla, Ford, and General Motors (GM).

Contemporary Amperex Technology Co. Limited (CATL), which controls more than one-third of the global EV battery market, is among dozens of Chinese companies recently added to the Pentagon’s “Chinese Military Companies” or CMC list. The National Defense Authorization Act of 2024 bans the Defense Department from dealing with companies on the list starting in June 2026. Although private companies are not explicitly banned from doing business with designated CMCs, U.S. firms are discouraged from doing so.

That poses a problem for Tesla, the largest global producer in the battery energy storage system (BESS) integrator market and CATL’s biggest customer. Last year, Bloomberg reported CATL was working with Elon Musk’s company on faster-charging cells and had supplied machinery to Tesla’s factory in Nevada, which is supposed to open this year.

Although CATL is effectively barred from selling in the U.S. directly, it has attempted to license its technology to multiple American automakers including Tesla.

Last year, CATL started negotiating with GM on a licensing deal and toyed with the idea of building a joint factory somewhere in the southern United States. Ford is further along in that process. Through its subsidiary BlueOval, Ford is currently constructing the United States’ first automaker-backed battery plant in Michigan, planning to license CATL’s tech to produce low-cost lithium-iron batteries at the facility, despite some pushback from lawmakers.

The BlueOval Battery Park Michigan, shown under construction in July 2024, plans an annual LFP battery production capacity of approximately 20 gigawatt-hours, with production starting in 2026. Courtesy: Ford

“BlueOval Battery Park Michigan will play an important role in our plan to help make electric vehicles more accessible and affordable by producing low-cost LFP batteries in the U.S. and not relying on imports,” said Lisa Drake, Ford’s vice president of electric vehicle programs and energy supply chain.

BlueOval is planning an annual LFP battery production capacity of approximately 20 gigawatt-hours, with production starting in 2026. The batteries built at the facility will power future Ford EVs. Late last year, the U.S. Department of Energy’s Loan Program Office (LPO) announced $9.63 billion for BlueOval SK to finance the construction of three more electric vehicle battery plants in Tennessee and Kentucky. 

CATL’s batteries are known for their quality and reliability, supplying other major EV manufacturers including Volkswagen, BMW, Honda, Toyota, Hyundai, Volvo, Daimler, Mercedes-Benz, and Kia. CATL has also partnered with several Chinese companies on BESS installations.

One big mistake?

CATL posted a statement on its website that insists the company has never engaged in any military-related business or activities.

“This designation by the Department of Defense is a mistake,” the company’s rebuke continues. “It does not restrict CATL from conducting business with entities other than DoD and is expected to have no substantially adverse impact on our business. We will proactively engage with DoD to address the false designation, including legal action if necessary, to protect the interests of our company and shareholders as a whole.”

The DoD’s CMC list, formally mandated under U.S. law as the “Section 1260H list” and updated annually, includes 134 companies with its latest revision. Fresh additions include gaming and tech giant TenCent (known for WeChat), artificial intelligence firm SenseTime, and biotech companies MGI Tech and Origincell Technology. Chip maker Changxin Memory Technologies was also added, as was Quectel Wireless, drone maker Autel Robotics, and China’s largest shipping company COSCO Shipping Holdings.

Drone maker DJI and lidar company Hesai Technologies both sued the Pentagon last year after landing on the list, but remain in its latest edition. The Pentagon did remove several companies including Beijing Megvii Technology, China Railway Construction Corporation Limited, China State Construction Group Co, and China Telecommunications Corporation.

AI company SenseTime said in a statement that the decision to include it on the list had “no factual basis.” TenCent and several others have taken a similar tone, alleging no wrongdoing and demanding removal from the list.

Reporting from the Associated Press was used in this article.

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