How Ford could keep CATL in the US battery game

A new US order targeting foreign-linked power-grid equipment appears, at first glance, to give South Korean battery makers an opening against their dominant Chinese rivals.

But Ford’s use of technology licensed from China’s CATL shows why the competitive benefit may be smaller than expected.

Ford argues that batteries produced at its wholly owned Michigan plant are American-made despite relying on CATL technology. That ownership structure could help the automaker navigate Washington’s latest restrictions as it expands from electric vehicles into utility-scale battery energy storage systems.

It does not, however, guarantee protection.

Executive Order 14420 reaches beyond where equipment is assembled or who owns the factory. It also covers critical components, software, digital services, maintenance and remote-access capabilities linked to covered foreign entities.

Whether Ford’s batteries clear that test will depend largely on how the US Energy Department implements the order — and how much continuing involvement CATL has in the technology, software and operation of the products.

For LG Energy Solution, Samsung SDI and SK On, the answer could reshape competition in the fast-growing US energy storage market.

US President Donald Trump signed Executive Order 14420, titled “Declaring a National Emergency to Secure the United States Bulk-Power System,” on Aug. 26.

The order allows the Energy Department to prohibit or impose conditions on acquisitions, imports, transfers and installations of certain foreign-linked equipment that it determines poses an unacceptable threat to US national security or grid reliability.

The restrictions apply to the bulk-power system, which includes transmission lines rated at 69 kilovolts or above but excludes local electricity distribution. Covered equipment can include utility-scale battery storage systems, grid-connected inverters, transformers, circuit breakers, control systems and uninterruptible power supplies supporting critical infrastructure.

The reach extends further down the supply chain, too. Critical components, firmware, software, digital and maintenance services, and remote-access functions can also face scrutiny if they were designed, developed, manufactured or supplied by an entity connected to a covered foreign jurisdiction.

Though China is among the jurisdictions potentially covered by the order, EO 14420 is not a blanket ban on all China-linked grid equipment.

The Energy Department must determine both that the equipment has the required foreign connection and that the transaction creates an undue or unacceptable security risk.

The department can also approve transactions subject to safeguards or establish a prequalification process for equipment and suppliers. Implementing regulations are due within 120 days of the order, leaving companies uncertain about how broadly the rules will be enforced.

Ford is investing about $2.5 billion in BlueOval Battery Park Michigan in Marshall, where it plans to produce lithium iron phosphate battery cells using technology licensed from CATL.

The plant is wholly owned and operated by Ford. The automaker controls production and employs the workforce; CATL provides licensed technology and related services rather than holding an equity stake.

That structure differs from a conventional joint venture in which a Chinese company owns part of the US operation.

“Legally speaking, this is an American enterprise operating on US soil and employing a US workforce,” said Kim Tae-hwang, a professor of international trade at Myongji University.

Ford has relied heavily on that distinction as political pressure over the arrangement has intensified.

In a Sept. 8 letter to Ford CEO Jim Farley, US Transportation Secretary Sean Duffy urged the automaker to cut ties with CATL and other Chinese companies, citing national security and supply-chain concerns.

Ford called the criticism “wrongheaded,” describing the Michigan site as a Ford-owned and Ford-operated facility representing billions of dollars in investment and about 1,700 American jobs.

It said its agreement with CATL was “a limited technology-licensing and services agreement, not a joint venture or foreign-owned manufacturing operation.”

Ford’s ownership model strengthens its case, but EO 14420 does not judge equipment solely by the nationality of the factory owner or the country of final production.

The central question is whether the equipment — or an important component, software system or service associated with it — was designed, developed, manufactured or supplied by an entity tied to a covered foreign jurisdiction.

That language could bring CATL’s licensed technology and services within the Energy Department’s review, even if Ford manufactures the cells in Michigan. Regulators could examine who controls the battery design, who updates software and firmware, whether CATL provides continuing technical or maintenance support and whether any foreign party has remote access to installed systems.

Ford could reduce those risks by keeping battery management, monitoring, cybersecurity and remote operations under US control.

Its Ford Energy business is developing energy-storage products and services, potentially allowing the automaker to combine domestically produced cells with Ford-controlled hardware, management systems and monitoring networks.

But until the Energy Department issues detailed rules or prequalifies Ford’s equipment, describing the company as immune from the order would go too far. At most, Ford has built a structure that may be easier to defend and modify than importing finished CATL batteries directly from China.

The Trump administration faces a difficult balance.

It wants to reduce Chinese access to sensitive US infrastructure, but the country also needs batteries, transformers and other equipment to support data centers, manufacturing facilities and a rapidly expanding power grid.

Chinese companies dominate global LFP battery production and retain major advantages in cost, scale and manufacturing experience. Removing them abruptly from the US supply chain could raise prices and delay energy projects.

Kim said Washington’s experience with Huawei may also encourage a more calibrated approach toward CATL.

“Huawei was a painful lesson for the US,” he said. “Washington assumed that sanctions would permanently cripple the company. They worked temporarily, but Huawei adapted and returned.”

“If the US tries to completely suffocate CATL, it may provide temporary relief, but CATL could continue growing outside Washington’s reach and become even harder for the US to influence.”

The order therefore gives Washington considerable discretion. It can prohibit equipment judged dangerous, require mitigation or allow products that satisfy security conditions.

That flexibility may be more useful than full decoupling, but it also makes the outcome less predictable for suppliers and investors.

Korean battery companies have been counting on US restrictions on Chinese suppliers to strengthen their position in North America.

LG Energy Solution, Samsung SDI and SK On are expanding energy-storage production in the region, betting that domestic manufacturing and supply chains aligned with Washington will give them an advantage over Chinese competitors.

LG Energy Solution expects its North American energy-storage battery capacity to reach 50 gigawatt-hours across five sites this year.

Samsung SDI, after repurposing production lines operated with Stellantis and acquiring GM’s interest in another venture, is expected to reach 50 GWh by 2028. SK On plans to supply at least 20 GWh in ESS orders this year, driven largely by demand in the US market.

If Ford can sell CATL-based LFP batteries into utility projects without major restrictions, however, the Korean companies could face stronger price competition than anticipated.

“Korea cannot currently match Chinese LFP batteries in either unit cost or technology,” said a senior researcher at a Korean battery company. “For energy storage, Chinese LFP is virtually the only commercially viable answer at the moment.”

The broader concern is the precedent. If Ford demonstrates that an American-owned licensing structure can satisfy US security requirements, other automakers and energy companies may pursue similar arrangements with Chinese technology providers.

“If Ford receives clearance, Tesla and others will inevitably demand the same treatment,” the researcher said.

Korean producers would still retain an important selling point: supply chains with fewer Chinese links and potentially lower regulatory risk. They may also have an easier path to Energy Department prequalification for sensitive grid projects.

But EO 14420 alone will not hand them the US energy-storage market.

The decisive question is no longer simply whether a battery uses Chinese technology. It is how much control the Chinese technology provider retains — and whether Washington considers that connection a manageable commercial dependency or an unacceptable national security risk.