CATL’s close CCP connections go beyond mere political affiliations. Consistent with rules issued by China’s Securities Regulatory Commission in 2018 for all publicly listed enterprises, CATL’s articles of association, which govern its operations, explicitly note that “the company shall establish a Communist Party organisation [internally] and carry out party activities”.
These party cells and the company’s other party-state linkages provide the CCP with almost unfettered access to CATL’s proprietary technologies and strategic market data, potentially giving other Chinese entities a competitive edge and undermining US and European companies’ positions in global markets.
Yet in a move reminiscent of Huawei’s push to dominate the 5G and smartphone sectors, CATL and BYD are already setting their sights on controlling battery-adjacent industries. These include EV charging networks and battery energy storage systems (BESS) for utilities to store power.
Moving into EV charging is a logical step for both companies, but BESS pushes the boundary of their influence. Such systems harness and store energy from various sources and release that power via existing transmission lines during electricity shortages or as a backup during the inevitable lulls in wind and solar power.
China is emerging as the world’s dominant supplier of electric vehicle batteries. Shutterstock
But there’s a catch: these Chinese batteries must be connected to host nations’ electrical grids, even though they are not presently subject to stringent review or oversight in either the US or Europe. Nor are US energy firms required to disclose any details on their partnerships with Chinese battery companies.
Owing to these transparency gaps, a full accounting of ongoing and planned Chinese BESS projects in the United States remains elusive. Several have broken ground in Florida, Virginia, Texas and Nevada.
Alarmingly, CATL batteries were reportedly installed on the US Marine Corps base at Camp Lejeune, which is home to a special operations unit tasked with evacuating non-combatants from Taiwan should Beijing invade. CATL has similarly and aggressively marketed BESS in European capitals, and projects are already under way in Britain, Hungary and elsewhere.
Just as with Huawei, the risks posed by Chinese BESS are immediate and undeniable. Research from the British risk management firm Aon reveals that pervasive cybersecurity deficiencies associated with BESS control systems could allow malign actors to trigger wide-scale electrical grid blackouts.
And a 2022 US Department of Energy report made clear that malicious actors are already “positioned well” to hack distributed energy systems, including BESS, in the US. Suspected Chinese cyberattacks on India’s power grid in 2021 and 2022 highlight the former’s readiness to target critical infrastructure. The Biden administration’s own reported scramble to detect Chinese cyber actors lurking in US infrastructure networks further underscores the threat.
With China resisting US pleas to manage superpower competition, other countries should step in.
Malicious actors can remotely install malware onto EVs during charging, enabling surreptitious monitoring and disabling of the vehicles.
Chinese-built EV charging networks are hardly safer. Internet-connected EV batteries and chargers exhibit many exploitable cybersecurity weaknesses typically associated with large-scale data breaches, according to a peer-reviewed British study.
Similar research conducted by Sandia National Laboratories in the United States demonstrates how malicious actors can remotely install malware onto EVs during charging, enabling surreptitious monitoring and disabling of the vehicles.
A separate report from Sandia notes “there is currently no comprehensive EVSE [EV supply equipment] cybersecurity approach” in the US, and that only “limited best practices” have been adopted by some industry players.
Of course, the danger isn’t solely digital. Numerous Chinese laws, but particularly the 2017 national security law and recently revised counter-espionage law, compel all Chinese companies to align their operations with Beijing’s strategic interests.
During peace or war, Beijing could demand that Chinese firms aid in spying or sabotage, forcing them, for example, to share schematics of critical infrastructure obtained from their US or European utility partnerships. Such demands are broadly consistent with China’s military-civil fusion, a national strategy aimed at breaking down barriers between civilian and military institutions to mobilise the former in service of the latter.
Policymakers on both sides of the Atlantic were clearly late to recognise the Huawei threat. Despite billions of dollars spent by the US government to rip out and replace Huawei gear, the company’s products still permeate the United States’ telecommunication architecture. The same goes for Europe.
Before CATL and BYD consolidate near-monopolies throughout US or European markets, policymakers should order an immediate technical assessment of Chinese EV charging networks and energy storage systems to document potential cyber vulnerabilities and China’s ability to exploit them.
In the interim, the US Defence Department and the defence ministries of other NATO members should halt all planned Chinese BESS projects on military bases and disconnect any systems that are already active.
Beyond simply investigating whether to impose punitive tariffs on Chinese EV imports, US and European governments should also move swiftly to institute comprehensive regulatory measures and stringent oversight over these sectors.
That includes reviewing potential technology transfers that might benefit the CCP. Leaders at the subnational level also have a role to play, such as requiring utility companies operating in their jurisdictions to disclose details regarding any past, present, or future partnerships with Chinese battery firms.
The threat posed by Beijing’s battery dominance is clear. What’s not is whether Washington and its European partners will prioritise decarbonisation over their enduring security needs.
Craig Singleton is a senior China fellow at the Foundation for Defence of Democracies.
Foreign Policy
