Included in the 2024 National Defense Authorization Act
Ban effective from October 2027
China's batteries restricted following semiconductors
Starting in 2027, the U.S. Department of Defense will no longer be allowed to use batteries produced by Chinese companies. This decision is based on the assessment that Chinese-made batteries could pose a threat to U.S. national security. Although this restriction does not apply to private companies, it is expected to strengthen the position of Korean-made batteries in the U.S. market.
On the 22nd, Bloomberg News reported that this provision was included in the National Defense Authorization Act (NDAA) signed into law by President Joe Biden on the 22nd of last month. According to Bloomberg, from October 2027, the U.S. Department of Defense will be prohibited from procuring batteries from Chinese companies such as CATL and BYD.
In addition to these two companies, four others?Envision Energy, EVE Energy, Gotion High-Tech, and Hithium Energy Storage Technology?are also included in the list of banned companies. These companies rank among the top 10 in the global battery market. Chinese battery companies, which have primarily operated in their domestic market, have recently been expanding into the global market.
Under the NDAA, the U.S. Department of Defense must establish detailed measures to implement the new regulations. The NDAA has previously restricted the use of Chinese-made semiconductors, and now batteries have been added to the list.
This measure is analyzed as reflecting the U.S. government and Congress’s intention to reduce dependence on China in the electric vehicle and green energy sectors. Bloomberg explained that it will "strengthen Washington’s efforts to decouple the Department of Defense from geopolitical competitors."
This restriction does not apply to batteries used for commercial purposes. Ford produces electric vehicles at its Michigan plant using batteries supplied by CATL. Tesla also receives some batteries from BYD. Through the Inflation Reduction Act (IRA), the U.S. government is gradually reducing subsidies for electric vehicles that use Chinese-made parts and critical minerals, thereby narrowing the presence of Chinese batteries in the U.S. market.
The U.S. Congress has been working to curb the entry of Chinese battery companies into the American market. Last year, Ford announced a joint venture factory with CATL, but it was indefinitely postponed due to opposition from Congress. Senators Ted Cruz and Marco Rubio sent a letter last month to U.S. Secretary of Defense Lloyd Austin, warning that the use of CATL batteries could pose a security risk.
Meanwhile, President Biden signed the Fiscal Year 2024 National Defense Authorization Act on the 22nd of last month. The bill had passed the Senate and House of Representatives on the 12th and 14th of the same month, respectively.
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