Could Tesla be Affected by Marco Rubio's Attempt to 'Blacklist' Chinese Battery Firm CATL?
US Senator Marco Rubio (R-FL) and US Representative John Moolenaar (R-MI) have written a letter to US Department of Defense Secretary Lloyd Austin, urging him to place Chinese battery giant Contemporary Amperex Technology Co., Limited (CATL) on the Section 1260H List (blacklist) of the National Defense Authorization Act.
Concerns Over CATL's Ties to the Chinese Communist Party
In a press release, the Republican lawmakers expressed concerns over CATL's close connections to the Chinese Communist Party and its military branch, the People's Liberation Army (PLA). They stated that the US's dependence on CATL batteries could pose a threat to national security, as it would make the country reliant on Communist China for energy infrastructure. Despite these concerns, they claimed that the Department of Defense (DoD) has yet to take action to put CATL on the "1260H list," which identifies Chinese entities operating in the US.
Rubio's Statement on CATL
Rubio stated that US policymakers have a responsibility to oppose any efforts by America's adversaries that could jeopardize national and economic security. He argued that by placing CATL on the Section 1260H List, the DoD could protect America's military infrastructure from exposure to the PLA and send a strong message to US companies considering partnerships with CATL.
CATL's Top Customers Include Tesla
A supply chain analysis by Bloomberg revealed that CATL's top customers include Tesla, Stellantis, Geely, Nio, Volkswagen, Nissan, Honda, and Volvo. A deeper investigation into CATL's global supply chain by risk management technology firm Sayari Labs showed that Tesla received 376 shipments from the Chinese firm over the past 12 months, which accounted for approximately 8.63% of all shipments.
CATL's Shipments to the US and Germany
About half of CATL's shipments over the last 12 months have been delivered to the US, and about 27.5% have ended up in Germany. As of July 29, CATL's US shipments included lithium-ion batteries to several buyers, including Geodis and Mercedes, Benz Vans. The majority of CATL's shipments are storage batteries (54.7%) and primary cells and batteries (41.47%).
Risks in CATL's Supply Chain
Data from Sayari indicates that CATL's supply chain has several risk factors, including concerns about forced labor.
Implications of Blacklisting CATL
The key question is whether Rubio's effort to blacklist CATL due to its "deep ties to Communist China" will gain momentum with the DoD. If the DoD does blacklist CATL, it could potentially disrupt Tesla's battery supply chain and its reliance on CATL. However, it's worth noting that Tesla also collaborates with other battery manufacturers, such as Panasonic.
Bottom Line
The potential blacklisting of CATL raises important questions about the interplay between national security and economic interests. It also highlights the complexities and vulnerabilities of global supply chains. What are your thoughts on this issue? Do you think the potential risks outweigh the benefits of working with CATL? Share your thoughts and this article with your friends. Don't forget to sign up for the Daily Briefing, delivered every day at 6pm.
