BYD and CATL face hit in Pentagon batteries ban

US lawmakers have banned the Defense Department from buying batteries made by China's biggest manufacturers, extending efforts in Washington to decouple the Pentagon's supply chain from its geopolitical rival.

The rule, implemented as part of the latest National Defense Authorization Act that passed on December 22, will prevent battery purchases from Contemporary Amperex Technology, BYD, Envision Energy, EVE Energy, Gotion High Tech and Hithium Energy Storage Technology, beginning in October 2027.

The measure doesn't extend to commercial purchases by companies such as Ford Motor, which is licensing technology from CATL to build electric-vehicle batteries in Michigan. Tesla also sources some of its battery cells from BYD.

CATL's licensing deal with Ford drew heightened attention last year from politicians amid rising concern about the role of Chinese companies in EV manufacture. Last month, Republican senators Ted Cruz and Marco Rubio sent a letter to Defense Secretary Lloyd Austin warning that the use of CATL batteries raises security risks.

Of the top 10 battery suppliers in the world, just three are non-Chinese. Recent data has shown CATL and BYD growing their global market shares.

While the Defense Department bans apply strictly to defense procurement, industries and lawmakers closely follow the rules as a guide for what materials, products and companies to trust in their own course of business.