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🗞️ Driving the news: The U.S. Department of Homeland Security (DHS) has raised concerns about the risks associated with Chinese dominance in the lithium battery market, particularly for utility-scale energy storage
• A recent internal report warns that reliance on Chinese batteries could threaten U.S. supply chain security, citing companies like CATL, BYD, and REPT as examples of state-supported firms gaining a competitive edge
• The report follows broader U.S. efforts to reduce dependence on Chinese technology amid national security concerns

🔭 The context: Chinese companies control a substantial share of the global lithium battery market, accounting for over 90% of energy storage system batteries
• Despite U.S. incentives to boost domestic battery production, Chinese firms continue to expand their presence, often leveraging government support to offer competitive pricing
• Recent U.S. policies, such as tariffs on Chinese batteries, aim to reduce dependency, but competition remains fierce

🌍 Why it matters for the planet: Lithium batteries are crucial for renewable energy storage, enabling the shift to sustainable power sources like solar and wind
• However, potential supply chain vulnerabilities could hinder the transition to clean energy if geopolitical tensions disrupt access to these essential components
• A diversified and secure battery supply chain is critical for global energy resilience and climate goals.

⏭️ What's next: The U.S. will continue to bolster its domestic battery industry through policies like the Inflation Reduction Act, which offers incentives for local production
• Meanwhile, there are ongoing legislative efforts to limit the use of Chinese-made batteries in government projects
• The DHS report may further prompt scrutiny of Chinese investments in U.S. infrastructure

💬 One quote: “It is simplistic to see this as just unfair competition due to Chinese government support, as a lot of what China did, such as creating demand for batteries through EV subsidies, is not unlike what we see in the West today” — Yayoi Sekine, Head of Energy Storage Research, BloombergNEF

📈 One stat: CATL and BYD hold 40% and 12% of the global energy storage battery market, respectively

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