The U.S. Department of Homeland Security (DHS) has expressed alarm over the nation’s reliance on Chinese-manufactured lithium batteries, citing potential threats to the U.S. energy grid and overall supply chain security.
An internal report, disseminated to local agencies in August, warns that dependence on Chinese battery technology could expose the U.S. to economic vulnerabilities as it shifts toward renewable energy sources.
The DHS document, acquired by Property of the People and analyzed by WIRED, identifies three Chinese firms—Contemporary Amperex Technology Co. Limited (CATL), Build Your Dreams (BYD), and Ruipu Energy Co. Ltd. (REPT)—for exploiting state backing to dominate the global battery sector.
“These companies are leveraging government support to swiftly penetrate the U.S. utility battery storage market, thereby creating supply chain dependencies on China,” the report asserts.
This analysis builds upon earlier evaluations of Chinese companies’ influence in the electric vehicle (EV) and battery supply chains, urging local agencies to monitor and report any suspicious activities involving these entities. According to SNE Research, CATL and BYD command 40% and 12% of the global energy storage battery market, respectively.
“Chinese manufacturers provide approximately 90% of energy storage system batteries, a larger proportion than that for EVs,” stated Vanessa Witte, a senior research analyst at Wood Mackenzie.
The market’s oversupply, partially driven by declining EV demand, has led to price reductions that enable Chinese firms to sustain their market supremacy.
The DHS report further highlights national security concerns, particularly as Chinese batteries find increasing applications in U.S. infrastructure projects. Partnerships such as CATL’s collaboration with Primergy Solar in Nevada and Duke Energy’s previous use of CATL products have raised concerns about foreign control over critical energy storage assets.
Fred Zhang, a spokesperson for CATL, refuted allegations of gaining unfair advantages, asserting, “CATL has achieved growth through innovation and strategic planning, not through state support.” Neither BYD nor REPT responded to requests for comment.
As the U.S. amplifies investments in domestic battery manufacturing through the Inflation Reduction Act and the Bipartisan Infrastructure Bill, the DHS cautions that Chinese firms are strategically targeting U.S. incentives to expand their market presence. The report notes that BYD has promoted U.S. state incentives to attract investment in its utility storage systems.
Despite attempts to mitigate dependence on Chinese products, experts caution that these companies maintain a significant pricing advantage. “The incentives offered by the U.S. government are substantial, but competing against established Chinese supply chains remains a formidable challenge,” remarked Yayoi Sekine, head of energy storage research at Bloomberg NEF.
The DHS report emphasizes the necessity of monitoring economic and supply chain risks as Chinese dominance in the battery industry continues to intensify.
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