The US Defense Department (DOD) has added Chinese battery giant CATL to a list of companies it says are affiliated with Beijing’s military, Kallanish learns. 

Chinese tech giant Tencent has also been added to the Chinese Military Companies List (CMC List), which was published on 7 January. Tencent is the company behind WeChat and has been developing infrastructural support for map services, big data, and models for intelligent electric vehicles. 

“This is a mistake and the company is not involved in any military-related activities,” CATL states. “We welcome responsible discourse on our business operations and take questions about our business seriously.”

“It is obviously a mistake for Tencent to be included in this list,” Tecent claims. “We are not a military enterprise or military supplier. Unlike export controls or other things, this list has no impact on our business. Nevertheless, we will work with relevant US departments to resolve misunderstandings.”

Despite the companies’ prompt response, their stock prices still took a hit. CATL’s shares fell as much as 6% in Shenzhen, though closed at 3% down on 7 January. Tecent’s shares in Hong Kong dropped just over 7%, with a similar movement on its US-listed stock following the news.

Some industry analysts believe the two companies will likely file lawsuits in the future.

Companies listed on the CMC List will face restrictions on defence-related procurement, contracts, and investments by the US. 

The US Secretary of Defense must submit a list of identified CMCs to Congress on a regular basis each year. At the same time, the provision also stipulates a dynamic update mechanism for the list, requiring the US Secretary of Defense to review the list at least once a year based on the latest information and to add to or delete it.

In January 2024, the DOD included Chinese semiconductor firm SMIC in the CMC list because the company won a product championship issued by the Ministry of Industry and Information Technology of China in 2019.

Last August, SMIC filed a lawsuit in the US District Court of Columbia against the US Department of Defense and the Secretary of Defense. Based on the US Administrative Procedure Act, SMIC accused the department of a decision that lacked factual basis and violated due process.

CATL has been working with Tesla and Ford to license its battery manufacturing technology for gigafactories in the US. Last year, the US banned the DOD from procuring batteries produced by CATL and other top Chinese manufacturers starting in 2027. This followed the disconnection of a CATL battery storage installed at a US Marine Corps facility in late 2023, under security concerns allegations.

The CMC List includes state oil and chemical companies, ship and aircraft buiding firms, telecoms and semiconductor manufacturers. CATL is the first battery maker in the list.