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The company joins shipping and logistics giant Cosco as well as state-owned China National Offshore Oil Corporation (CNOOC) on the list, classifying them as military companies with ties to the Chinese military.
This determination doesn’t impose any immediate sanctions on CATL or other companies on the list.
That means companies and other government agencies can still do business with CATL, including buying batteries, operating joint ventures and signing future purchasing orders.
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But the list does act as a guide for other US government departments – including the departments of Commerce and the Treasury – to consider actions, including sanctions, in the future.
CATL said in a statement that it had never engaged in any military-related business or activities, and that its addition to the CMC list was “a mistake.”
The company noted that it doesn’t expect any substantially adverse impact on its business, and that it was engaging with the US Department of Defense to address the situation, including by legal action if necessary.
The potential implications for the battery sector, and the broader push to use electric vehicles (EV), are significant.
CATL is a major supplier to Tesla, producing the Shenxing battery, a lithium-iron-phosphate (LFP) battery with super-fast charging and long driving ranges.
It also has a $3.5 billion project with automaker Ford to develop a plant making LFP batteries for EVs in Michigan.
CATL also supplies or works with US companies outside the country, including with automaker Stellantis at a planned LFP battery plant in Spain.
The Chinese company also manufactures a vast number of energy storage systems used in the US.
Obstacles in the path of the world’s largest EV battery and energy storage maker probably won’t help to speed up the relatively slow pace of EV adoption in the US.
For sure, being on the CMC list doesn’t guarantee further action will be taken. To date, the Biden administration has not taken the next step of adding any CMC list companies to the US investment ban list, which prevents US persons from investing in them.
Given that President Joe Biden leaves office in less than two weeks, pundits say he’s unlikely to ban investment in CATL before then.
But President-elect Donald Trump, whose inauguration will take place on January 20, could – theoretically – decide to make the move.
Whether or not Trump goes down that route remains to be seen. There is, however, precedent: during his last term, Trump banned investment in companies added back then to the CMC list by the Defense department. These companies were eventually delisted in the US.
This time around, he’ll have to juggle potential domestic opposition to a full ban from individuals like Tesla co-founder Elon Musk and incoming market-friendly Treasury Secretary Scott Bessent with pressure from anti-China lawmakers, including Republican Senator Marco Rubio.
Musk’s view might nonetheless be complicated by CATL founder Robin Zeng’s comments in a recent interview that Tesla’s cylindrical 4680 battery cells will “never be successful.”
Trade tensions with China have been intensifying for some years, but heated up further last week when Beijing said it was planning to curb the export of technology used to extract minerals critical for the growth of EVs.
The warning signs were evident a year prior, when Duke Energy agreed to decommission the CATL battery storage systems installed at Camp Lejeune, the largest marine base in the US.
The decision followed conversations between Duke Energy’s leadership team and a government select committee co-headed by Rubio.
Duke Energy replaced the systems with an American alternative and committed to only sourcing from the US or allied nations in the future.
Even being on the CMC list could give US companies and government agencies pause when considering future investment decisions.
Coming on the back of the Biden administration’s nixing of a deal between US Steel and Japan’s Nippon Steel on national security grounds, the investment climate in the US seems to be becoming less open, even for its allies.
That could, of course, all change very soon under Trump. But with the rhetoric around tariffs and national security already heating up, the indications are that the President-elect will use all available tools in the box to achieve his goals.
The CMC list is likely to become one of them.
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