The Observer Research Foundation (ORF) has announced that new U.S. "foreign entity of concern" rules and the designation of Contemporary Amperex Technology Co. Limited (CATL) as a "Chinese military company" are affecting clean energy, industrial policy, and geopolitics by restricting Ford–CATL ties. This announcement was made in an October 25 report on the ORF's website.
According to the Observer Research Foundation’s report, the U.S.–China rivalry has expanded beyond tariffs and chip restrictions into critical raw materials essential for electric vehicles, defense systems, and grid-scale storage. The report explains that lithium-ion battery supply chains—particularly refining, midstream processing, and component manufacturing—have become geopolitical terrain as Washington seeks to avoid dependence on Chinese control points. It further notes that CATL’s designation by the U.S. Department of Defense as a "Chinese military company" underscores how supply-chain security, national security, and clean-energy policy are converging.
The Observer Research Foundation states that China dominates between 70 and 95 percent of global processing capacity for lithium, cobalt, phosphate, and graphite, creating structural vulnerabilities for U.S. automakers reliant on imported battery-grade materials. The report adds that China controls nearly 80 percent of global LFP processing, two-thirds of nickel-based cathodes, and more than 90 percent of graphite anodes, giving Beijing strategic leverage over midstream chokepoints. It stresses that this dominance is the precise reason the United States classifies entities like CATL as foreign entities of concern, limiting partnerships such as the Ford–CATL licensing model.
The same report explains that beginning in 2024, the U.S. will deny electric vehicle tax credits to any vehicle containing battery components from Chinese-controlled entities; in 2025 this restriction expands to critical minerals such as lithium and graphite. ORF notes that FEOC status is triggered when a covered nation—such as China—holds 25 percent or more of board seats, equity, voting rights, or contractual control, making Ford–CATL cooperation politically and financially risky. The report further highlights that CATL’s listing as a "Chinese military company" acts as a strong deterrent for U.S. manufacturers because it increases CFIUS scrutiny, procurement barriers, and public-sector objections, making U.S. market entry for CATL increasingly untenable.
Observer Research Foundation is an independent global-policy think tank based in India that produces research on geopolitics, technology, energy security, and industrial policy. Its "China Chronicles" series includes the report "CATL in the Crossfire: How US Rules Are Rewriting EV Supply Chains," providing detailed analyses of China’s role in global strategic competition. ORF’s work is widely cited in academic, policy, and diplomatic communities with publications aimed at informing decision-making on emerging international challenges.
