It’s been a busy week for the US, as competition heats up with China and blacklisting and export controls measures roll out.

FIRST UP - The Pentagon blacklists CATL over Chinese military affiliation concerns: The US Defence Department has added Chinese EV battery giant CATL — a major supplier for US automakers Tesla and Ford — to its list of companies allegedly linked to China’s military, according to a statement (pdf) on Monday.

What does the move mean: Blacklisting a company for links to foreign militaries does not trigger any sanctions or export controls, reports Forbes. However, there are several possible repercussions for CATL:

  • It could have a major impact on the company’s future ventures in the US by deterring US firms — particularly those with major US government contracts — from partnering with the blacklisted entity;
  • It could also undermine the company’s ability to access the US debt market as financing institutions revise their exposure risks;
  • It could pressure the Department of Commerce to add the company to the list of sanctioned entities.

The impact: The blacklist sent CATL’s Shenzhen-listed shares tumbling 2.8%, erasing USD 4.4 bn in market value, Reuters reported on Tuesday. It may also impact CATL’s expansive financial dealings in the US as banks re-assess their involvements. For example, CATL has tapped major US banks, including Goldman Sachs, Bank of America, JPMorgan, and Morgan Stanley, to prepare for a secondary listing in Hong Kong that could raise up to USD 7.7 bn, sources told the Financial Times on Wednesday.

Tesla’s US military contracts could be threatened: Tesla depends on CATL’s batteries for its Shanghai operations, and the two firms are in talks to license CATL’s tech for US-based battery manufacturing, Reuters reported Tuesday. While Tesla may see no near-term impact, the possibility of being “excluded from military contracts may give everyone considering a partnership with CATL a pause,” Morningstar analyst Seth Goldstein told Reuters. US President-elect Donald Trump’s close relationship with Elon Musk, however, may shield Tesla from the fallout, he added.

MEANWHILE- Beijing is moving to expand its export controls on essential tech used to extract and process critical minerals, in a bid to tighten its grip on global EV supply chains, CNN reported Friday. The move comes after China recently banned the sale of materials used in semiconductors, a critical component in EV production, such as gallium and germanium.

The targeted tech: The plan would add to the country’s export controls list battery cathode tech, different technologies, including those used in extracting and processing lithium, recycling batteries, as well as the tech preparing phosphate, manganese, and lithium hydroxide and carbonate for battery production, according to a China Commerce Ministry notice(pdf) published last week.

REMEMBER- The move comes at a time of heightened trade and tech rivalry with the US that could further escalate under the Trump administration, whose transition team views batteries and critical minerals sector as a security and defense priority, suggesting it would prioritize investing in the sector and maintaining tariffs under national security provisions.

The impact: “If implemented, a ban could significantly strengthen China’s dominance in the battery ecosystem, especially to boost its EV batteries supply chain,” Counterpoint Research Associate Director Liz Lee told CNN. Such restrictions could complicate operations for Western lithium producers relying on Chinese tech to process the material into battery cathodes.

Biden administration eases criteria for USD multi bn hydrogen tax credits: The Biden administration has expanded the eligibility of tax credits for hydrogen production under its Inflation Reduction Act to include producers of nuclear power, grey hydrogen, hydropower and geothermal energy, according to a press release published last week. The bill allows for beneficiaries up to USD 3 per kg of clean hydrogen and to claim up to 30% investment tax credits. The incentive implements the benefits for ten years, so long as projects commence construction before 2033.

REFRESHER- Grey hydrogen? Grey hydrogen is produced using fossil fuels, typically natural gas or coal, primarily through a process called steam methane reforming.

Loosening the rules: The Treasury Department had issued strict rules for the tax credits, without which the production of hydrogen using electrolyzers could consume significant amounts of power, potentially raising greenhouse gas emissions, The New York Times reported last week. The rules mandated that electrolyzers would need to operate during the same hours as the wind or solar farms starting 2028. The final rules, however, provide hydrogen producers with two extra years, until 2030, before they must match their output with clean electricity on an hourly basis.

Good news for atomic power: The new rules specify that up to 200 MW of a nuclear reactor’s power capacity can qualify as clean power and is eligible for credits if the plant was at risk of closure arising from economic challenges, Reuters reported last week. Reactors that restart after being shut down can also obtain credits. US’ largest nuclear power generator Constellation Energy – which lobbied the administration to include existing reactors in the program – will evaluate the feasibility of its proposed USD 900 mn hydrogen project at its LaSalle nuclear plant in Illinois and its role in a Midwest hydrogen hub.

Northvolt bankruptcy plays in overtime: Swedish battery cell maker Northvolt’s shareholders — including Volkswagen and Goldman Sachs — voted to continue operations amidst bankruptcy procedures, Reuters reported Wednesday. The vote was required by Swedish law, which mandates that Swedish companies obtain shareholder approval to continue operations if their equity value falls below 50% of their registered share capital.

ICYMI- Northvolt filed for Chapter 11 bankruptcy protection in the US last November, citing major liquidity issues and USD 5.84 bn of debt on the books. The battery maker’s prospects dipped when automotive giant BMW canceled a EUR 2 bn order, competition from China intensified, and funding opportunities dried up.

OTHER STORIES WORTH KNOWING ABOUT THIS WEEK-

  • Chinese mining firm to begin lithium mining in Congo’s disputed site in 2026: China’s ZijinMining Group is planning to begin lithium mining in the Democratic Republic of the Congo (DRC) in 1Q 2026. The Chinese takeover of the Monano Project is expected to be disputed via an international arbitration by Australia’s AVZ Minerals, whose license granting it 75% rights of the project was revoked. (Bloomberg)
  • EU plans “stress tests” in the wake of global rising temps: The EU is reportedly planning “stress tests” of railways and electricity grids next year to preempt complications related to rising global temperatures. The initiative is expected to be part of a larger policy to respond to climate change-related disasters. (the Financial Times)
  • California receives approval for deep rock CCS project: The US’ Environmental Projection Agency approved California’s first carbon capture and storage project. California Resources is now authorized to build four deep injection wells in Elk Hills Oil Field to inject around 1.5 mn metric tons of carbon annually for 26 years. (Bloomberg)
  • The world’s first commercial electric aircraft to take off: Liaoning General Aviation Academy’s (LGAA) four-seater electric aircraft RX4E has become the first electric aircraft certified for commercial use by the Civil Aviation Administration of China. LGAA’s global partner Volar Air Mobility aims to launch the aircraft globally to address short-haul regional air mobility challenges. (Press Release)
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