In August, analysts from the U.S. Department of Homeland Security (DHS) circulated an internal report to local agencies highlighting significant economic risks associated with dependence on Chinese utility storage batteries. This warning raises concerns about America’s ability to develop a secure supply chain, particularly as the reliance on foreign technology grows.
The report, which was first accessed by the national security transparency organization Property of the People and reviewed by WIRED, accuses Chinese companies of leveraging state support from the People’s Republic of China to penetrate the emerging U.S. energy storage market. It stresses the importance of reporting any suspicious activities that pose a threat to national security.
According to the analysis, three major companies are identified as particularly influential: Contemporary Amperex Technology Co. Limited (CATL), Build Your Dreams (BYD), and Ruipu Energy Co. Ltd. (REPT). These firms are said to have utilized various forms of state assistance to bolster their business strategies aimed at gaining market share within the United States.
Currently, CATL and BYD dominate the global energy storage battery industry, holding 40 percent and 12 percent of the market shares, respectively, based on data from South Korean energy research firm SNE Research. With eight out of the ten leading companies based in China, alternatives for domestic companies looking to establish grid storage capabilities are limited.
This report builds upon earlier assessments which scrutinized the noncompetitive practices of Chinese state-supported enterprises in both the electric vehicle and battery supply chains. As of now, DHS has not provided further comments regarding the findings outlined in the document.
Notably, CATL recently entered into an agreement with Primergy Solar to construct the largest solar and storage project in Nevada, which became operational in 2023. Furthermore, CATL’s batteries have been utilized by Duke Energy; however, following concerns regarding national security, Duke Energy terminated its partnership with CATL for electricity storage at a marine base.
In response to these allegations, Fred Zhang, a spokesperson for CATL, has dismissed claims that the company relies on state support. Zhang emphasized that CATL’s growth is attributed to continuous innovation, strategic foresight, and a commitment to delivering high-quality products at competitive prices.
Communications from BYD and REPT have yet to be received by WIRED for additional commentary. This scrutiny of Chinese companies is part of a broader initiative by the U.S. government to evaluate the potential risks of domestic utility companies becoming over-reliant on Chinese batteries, thereby exposing vulnerabilities in energy storage capabilities.
The dynamics of this situation highlight significant implications for U.S. cybersecurity and economic strategy. The potential exploitation of supply chain dependencies may involve tactics aligned with the MITRE ATT&CK framework, such as initial access through market penetration, persistence through market share dominance, and privilege escalation via state support. As businesses navigate this challenging landscape, awareness of these threats becomes increasingly critical.
