U.S. Investigates Three Chinese Battery-Material Makers — EV Supply Chain Tensions Escalate
The United States has launched patent violation investigations into three Chinese battery-material manufacturers, escalating trade frictions in the EV supply chain at a moment when CATL — China’s dominant battery maker — just reported a 57% revenue surge driven by the global green energy boom. The twin developments, reported by Caixin Global and the South China Morning Post on July 24-25, 2026, underscore the growing strategic tension between Washington’s desire to secure critical mineral supply chains and Beijing’s emergence as the world’s dominant battery producer.
Why It Matters
For foreign companies in the EV and battery supply chain, the U.S. probe targets a specific vulnerability: intellectual property in the production of battery precursor materials. The three companies under investigation — all based in Zhejiang province — are suppliers of cathode active materials and electrolyte precursors that feed into the lithium-ion battery supply chain serving automakers globally, including Tesla, Volkswagen, and BMW.
The investigation comes under Section 337 of the Tariff Act of 1930, which allows the U.S. International Trade Commission (USITC) to block imports of products that infringe U.S. patents. If the ITC finds against the Chinese companies, the ruling could disrupt material flows to U.S. battery manufacturing plants at a critical moment in America’s domestic battery buildout.
The Details
Caixin Global reported on July 24 that Carbon One, a Zhejiang-based advanced materials company, and two of its subsidiaries are the subjects of the USITC probe. The investigation centers on alleged patent violations related to the production of high-nickel cathode materials, a key input for the next generation of high-energy-density EV batteries.
Meanwhile, CATL — the world’s largest EV battery manufacturer — reported revenue growth of 57%, according to SCMP reporting. The company’s dominance in lithium iron phosphate (LFP) battery chemistry continues to expand, with contracts now covering most global automakers producing EVs in the affordable to mid-range segment. CATL’s market share in the global EV battery market stood at 36.9% in H1 2026.
| Company | HQ | Product | Status |
|---|---|---|---|
| Carbon One | Zhejiang | Cathode materials | Under USITC investigation |
| Carbon One subsidiary A | Zhejiang | Electrolyte precursors | Under USITC investigation |
| Carbon One subsidiary B | Zhejiang | Battery-grade chemicals | Under USITC investigation |
| CATL | Fujian | LFP / NMC batteries | Revenue up 57% (H1 2026) |
The broader context matters. China dominates the battery supply chain at every stage: it controls over 80% of global cathode production, 70% of anode production, and processes more than 60% of lithium, cobalt, and graphite. The U.S. Inflation Reduction Act (IRA) has attempted to “friend-shore” critical mineral sourcing, but actual supply chain reconfiguration is proving slow. The Carbon One investigation signals that Washington is willing to use IP enforcement as a lever where tariff policy has struggled to shift supply chains quickly.
What Your Business Should Do
If your company sources battery materials from China or competes in the EV supply chain, here are the strategic considerations:
- Map your IP exposure — If your company uses cathode or electrolyte technologies developed in partnership with Chinese suppliers, review the patent landscapes in both jurisdictions. The ITC probe may test patents related to high-nickel cathode production that have broader applicability across the industry.
- Diversify material sourcing — The investigation is a reminder that Chinese battery-material suppliers face growing regulatory risk in Western markets. Evaluate alternative sources in South Korea, Japan, and North America for critical materials.
- Monitor the ITC timeline — Section 337 investigations typically conclude within 12-18 months. A finding against Carbon One could create supply bottlenecks for auto OEMs that rely on these specific material inputs. Start contingency planning now.
- Watch CATL’s next move — With revenue surging, CATL is likely to accelerate its overseas factory buildout, including its planned plants in Hungary and Indonesia. These facilities may offer supply chain workarounds for automakers seeking to avoid direct Chinese imports.
One Data Point to Remember
36.9% — CATL’s share of the global EV battery market in H1 2026. China’s grip on battery production is a strategic vulnerability for any automaker scaling EV production outside China.
Where to Go From Here
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