Industry leaders on the future of EV supply chains amid US-China tensions

China’s rise as a superpower in the electric vehicle (EV) industry has reshaped global supply chains, and at the centre of this transformation is Contemporary Amperex Technology Co. Ltd. (CATL). As the world’s largest EV battery maker, CATL has become a critical player in the clean energy transition – and a lightning rod for geopolitical tensions. Co-chairman and co-founder Pan Jian of CATL, speaking recently at the World Economic Forum Annual Meeting in Davos, underscored the global nature of the EV revolution: “It’s not going to be a one-country effort in terms of EVs. It’s going to be a global effort.”

CATL controls an estimated 37% of the global EV battery market, far outpacing its nearest competitor, Chinese EV maker BYD, which holds around 17%. The company supplies batteries to leading automakers worldwide, including Tesla, Ford and Volkswagen. CATL’s technological edge, particularly in fast-charging and high-energy-density batteries, has allowed it to stay ahead of competitors and position itself as a crucial player in the clean energy economy. It is also pioneering new battery chemistries, pursuing more environmentally friendly approaches to battery manufacturing – and hedging against geopolitical tension over critical minerals.

CATL’s dominance has also made it a target. In January, only weeks before Donald Trump’s inauguration, the US Department of Defense added CATL to its list of “Chinese military companies”, alleging links to the Chinese military – an accusation the company vehemently denies. “CATL has never engaged in any military-related business or activities,” the company stated, adding that it was prepared to take legal action to contest the designation. While the Pentagon’s blacklist does not directly prohibit CATL from doing business in the US, it signals heightened scrutiny and could pave the way for further sanctions under the Trump administration.

Pan Jian’s observations at Davos captured the stark contrasts between global EV markets. “If you look at the EV market,” he said, “it’s growing at an extraordinary pace in China, but stalling in the US and Europe.”

This disparity is due, in part, to differing levels of government and private sector collaboration. Pan highlighted China’s success in fostering a robust EV ecosystem through a “perfect marriage between the public and private sectors”. On the public sector side, Pan noted that over the past decade, the Chinese government has laid the groundwork with subsidies, infrastructure investment and supportive policies, allowing private companies to flourish. In contrast, Western markets have struggled with fragmented policies and insufficient incentives.

Anindya Novyan Bakrie, chairman of the Indonesian Chamber of Commerce and Industry, echoed this point, emphasizing the role of coordinated government support in his own country’s EV ambitions: “Indonesia wants to do this because we’re still importing oil. But our ability to build battery materials using green energy gives us a chance to balance economic opportunity with environmental responsibility.”

But while crediting the Chinese government for creating a good policy framework, Pan was clear that “it's the private sector who has done the job”, including in creating China’s impressive charging infrastructure. Ultimately, it’s the EVs themselves that have to attract customers: “You have to offer a better product in terms of value proposition to consumers,” said Pan. “Environmental protection is a by-product of that process, not the primary driver.”

Pan also emphasized the critical role of the software component in driving EV adoption. “In China, we no longer call them EVs; we call them EIVs – where the ‘I’ stands for ‘intelligent,’” he said. “The ‘I’ is what truly makes the difference. Without the intelligence aspect, EV penetration in China would never have exceeded 30%. The integration of software into vehicles has unlocked a whole suite of features that traditional combustion engine cars simply can’t match.”

Jakob Stausholm, CEO of Rio Tinto, offered additional context, highlighting the complexity of building EV supply chains globally: “Mining depends on geology, and you cannot just consolidate everything in one place. Lithium, for instance, comes from Latin America, Africa, Australia and Canada. The challenge is finding the most efficient and sustainable ways to extract and process these materials.”

Despite its concentration of production capacity in China, CATL has aggressively pursued international expansion. The company is building battery factories in Germany, Hungary and Indonesia, among other locations, to reduce reliance on its home market and adapt to geopolitical pressures. “With the spread of EV markets,” Pan said, “the production and the supply chain also spreads around different parts of the world.”

This expansion aligns with CATL’s strategy to balance global supply chains while addressing concerns about over-concentration in China. For instance, its joint ventures with automakers Stellantis and Ford highlight the company’s willingness to work with Western firms to localize production and comply with regional standards. “No one is going to be able to dominate this space entirely,” Pan noted, “and it’s not healthy to concentrate production capacity too much in one place.”

Elizabeth Shuler, president of the AFL-CIO, added a labour perspective, stressing the importance of ensuring high-wage jobs in this transformation: “Working people want to be part of defining this future and making it a prosperous, safe one for the workers who will power these industries. EVs are a chance to build a new middle class – but only if we make worker voices part of the equation.”

One of CATL’s strengths lies in its technological flexibility. The company is investing in alternative battery chemistries, such as lithium iron phosphate (LFP), which rely less on scarce materials like nickel and cobalt. “If one particular mineral gets very expensive,” Pan explained, “the market will shift towards other chemistry formats.” This adaptability not only enhances CATL’s resilience, but also positions it to lead as the industry transitions to next-generation battery technologies like solid-state and sodium-ion batteries.

South Africa’s Minister of Science, Technology and Innovation, Bonginkosi Emmanuel “Blade” Nzimande, pointed out that countries like his are also making strides in battery innovation. “We are investing in the production of new battery technologies through our leading science entities. Energy storage capacity is critical to supporting the EV industry.”

The road ahead for CATL is strewn with obstacles. The Trump administration’s tariffs on Chinese EVs and proposed bans on Chinese software – the very thing Pan credits for China’s edge in EVs – in US-sold vehicles are likely to complicate CATL’s operations. Furthermore, the Pentagon’s designation could deter US automakers from deepening partnerships with CATL, despite the company’s importance to their supply chains.

Yet CATL’s leadership remains confident. Pan’s optimism reflects a broader belief in the inevitability of EVs and the necessity of global collaboration. “It’s a massive cultural shift,” he said, referring to the transformation of the auto industry, “but it’s going to happen.”

As the EV revolution accelerates, CATL’s ability to navigate these geopolitical and market complexities will shape not only its future, but also the contours of the global energy transition. Its story is emblematic of a world grappling with the contradictions of competition, cooperation and the urgent need for sustainability.