Chinese battery manufacturer CATL's domestic car business chief technology officer (CTO) Gao Huan introduces CATL's Freevoy Super Hybrid Battery II during the CATL Tech Day event ahead of the Beijing Auto Show in Beijing. WANG Zhao/AFP via Getty Images

U.S. Transportation Secretary Sean P. Duffy handed Ford Motor Company CEO Jim Farley a formal written ultimatum on September 8, 2026, published by the DOT, declaring that Ford's licensed use of technology from Chinese battery maker CATL at its Michigan factory creates a structural national security liability — because Chinese law legally compels CATL to cooperate with Beijing's intelligence agencies, regardless of what any licensing contract says.

The warning lands at a moment that reveals something more uncomfortable than a government-corporate dispute: seven Chinese companies together control 72.8 percent of the global EV battery market between January and July 2026, with CATL alone accounting for 39.9 percent — and CATL itself is on the U.S. Defense Department's list of firms linked to China's military. Any American automaker serious about building electric vehicles is drawing on the same technology pool that Washington now calls a national security threat.

Duffy's Letter Names the Mechanism, Not Just the Company

Duffy's concerns in the letter rest on a specific legal claim: China's National Intelligence Law, passed in June 2017, requires all Chinese organizations and citizens — including companies operating overseas — to "support, assist, and cooperate with national intelligence efforts in accordance with law." The law's Article 10 extends Chinese intelligence agencies' reach to activities conducted domestically and abroad.

The practical implication for Ford is stark. Its BlueOval Battery Park in Marshall, Michigan uses lithium-iron-phosphate battery cell technology licensed from CATL, a company on the Pentagon's Section 1260H list of Chinese military-linked firms. CATL's CEO, Zeng Yuqun, is a member of the Chinese People's Political Consultative Conference, a body led by the Chinese Communist Party's Politburo Standing Committee.

The DOT letter identified three specific partnerships as unacceptable. Ford continues to use CATL's licensed battery technology at BlueOval Battery Park in Marshall. Ford entered a joint venture with Chinese automaker Geely to jointly manufacture low- and zero-emission vehicles at its Valencia, Spain factory. And Ford's plans to reshore Lincoln Nautilus production away from China have been pushed to 2030, leaving the company dependent on Chinese manufacturing for several more years. The DOT also raised concerns about Ford's reported discussions with BYD over hybrid vehicle components.

Secretary Duffy framed this as a test of whether Ford can be treated as a reliable partner: "When a company intentionally chooses to deepen operational dependencies on strategic competitors, it fails to act as the reliable partner the American public and this DOT require. Iconic American companies, like Ford, are also expected to out-innovate competitors. To that end, they need to chart clear paths to technological self-reliance."

It is worth noting that scholars debate how far China's intelligence law actually reaches in practice. Jeremy Daum at China Law Translate argued in 2024 that Article 7 likely was not designed to require active intelligence gathering and lacks a direct enforcement mechanism. But Daum also acknowledged that direct requests from Chinese law enforcement or security agencies "would still be difficult to resist meaningfully" — which is the condition U.S. national security officials are focused on.

Ford Fires Back

Ford did not accept the characterization quietly, calling Duffy's letter a wrongheaded capture-headlines attempt "at the expense of a company that has done more for American manufacturing than virtually any other in the nation's history."

The automaker disputed both the framing and specific facts in the letter. Ford argued that its BlueOval Battery Park in Marshall is wholly owned and operated by Ford, represents billions of dollars in domestic investment, and supports approximately 1,700 American jobs. Its arrangement with CATL is, Ford emphasized, a limited technology-licensing and services agreement — not a joint venture or a foreign-owned operation.

Ford further noted that the White House itself had highlighted the Marshall battery project in a recent press release, and that Commerce Secretary Howard Lutnick had publicly praised Ford's decision to expand Lincoln production domestically. The company suggested that had Duffy contacted Ford before releasing the letter to the press, it would have been able to clarify those details directly.

The contradiction the company is pointing to is real: multiple parts of the Trump administration have simultaneously praised and condemned the same project. That tension reflects the broader difficulty of enforcing a simple "no Chinese tech" rule against a company that is already building — and in some cases may have already deployed — that technology in a domestic facility.

What Connected-Car Law Already Says

Whether Duffy's letter carries legal force is a separate question from what existing federal regulation already requires. The Bureau of Industry and Security (BIS) issued a final rule on January 14, 2025, prohibiting transactions involving connected vehicles and certain vehicle components with a sufficient nexus to China or Russia. The rule took effect March 17, 2025.

The BIS rule specifically targets two categories of technology. The first is Vehicle Connectivity Systems (VCS) — defined to include telematics control units, Bluetooth modules, cellular modules, satellite modules, and Wi-Fi modules. These are the systems that collect and transmit driver location, driving patterns, personal data, and infrastructure mapping in real time. The second is Automated Driving Systems (ADS), covering the software that enables vehicles to operate autonomously. Both categories, if supplied by Chinese or Russian entities, are now restricted.

The BIS rule draws an important technical distinction that the DOT's letter blurs. CATL provides Ford with battery-cell manufacturing knowledge — the chemistry and production process for lithium-iron-phosphate cells — not vehicle connectivity software or telematics systems. The battery technology does not directly control what data a vehicle collects or transmit, and it is not the same as the VCS hardware and software the BIS rule targets.

What Duffy appears to be arguing is that a licensing relationship with a company on the DoD's Chinese military list creates a dependency and a point of leverage that goes beyond the narrow VCS/ADS definition — a systemic entanglement that threatens operational security even when no single wire directly connects CATL to a vehicle's cellular modem. That is a harder case to make legally than the BIS rule's bright-line prohibitions, but it is the case the DOT has now put in writing.

Does Cutting Chinese Tech Have a Supply-Chain Answer?

Duffy's letter describes CATL's battery market position as a competitive problem that American innovation can solve. The arithmetic of the global battery market makes that case harder than the letter implies.

Seven Chinese companies held a combined 72.8 percent of the global EV battery market for the first seven months of 2026, with CATL accounting for 39.9 percent of that total. For context: no other single supplier, in any manufacturing sector, currently holds that degree of control over a component class that every major automaker is staking its electrification future on. LG Energy Solution, the second-largest supplier, held roughly 13.6 percent of the global market in 2022, with subsequent share declining as CATL continued to grow.

American and Japanese battery joint ventures — such as Ford's BlueOval SK facilities in Kentucky and Tennessee, which use technology from South Korea's SK On — exist and are scaling. But they do not yet match CATL's production volumes, cost structure, or chemistry optimization for the LFP cells that have become the standard for affordable mass-market EVs. LFP chemistry, which avoids expensive nickel and cobalt, is where CATL's advantage is largest, and it is precisely the chemistry Ford licensed for its Marshall facility.

If the Connected Vehicle Security Act passes and its provisions extend to battery technology licensing (the current bill's text targets connected vehicle software and hardware rather than battery chemistry specifically), American automakers would face a choice between switching to more expensive battery chemistries and suppliers or losing access to the dominant technology in the market they are competing to serve. That choice may be the administration's intention — but it is not yet the law.

Congress Moves: The Connected Vehicle Security Act of 2026

The legislative instrument designed to make the DOT's demands mandatory is the Connected Vehicle Security Act of 2026 (CVSA 2026), introduced April 29, 2026 by Senators Bernie Moreno (R-OH) and Elissa Slotkin (D-MI). The Senate Commerce Committee gave the bill unanimous approval on July 22, 2026.

The CVSA 2026 would prohibit the importation, manufacture, and sale of connected vehicles, software, and hardware linked to China or other foreign adversaries — including components from joint ventures with entities under Chinese or adversary control. Enforcement would be phased in: software and vehicle restrictions beginning in 2027, hardware restrictions in 2030. Those timelines track the BIS rule's existing schedule and would give it legislative permanence that executive-branch regulation alone cannot guarantee.

The bill has drawn support that cuts across the industry's public-private tensions. General Motors, Honda, Stellantis, the United Auto Workers, the Alliance for Automotive Innovation, and Ford itself have all expressed support. That last entry is the same Ford that Duffy is accusing of endangering national security — and it is the same Alliance for Automotive Innovation that, in September 2026, urged Congress to enact a permanent Chinese vehicle ban.

How Chinese Law Creates the Risk in Connected Vehicles

A modern connected vehicle is, as then-Commerce Secretary Gina Raimondo described when announcing the BIS rule, "a computer on wheels." Every passenger vehicle produced for the U.S. market now incorporates cellular modems for over-the-air (OTA) software updates, GPS for navigation and location tracking, and Vehicle-to-Everything (V2X) communications systems for traffic management and collision avoidance. These systems continuously collect data — driver location, speed, driving patterns, road infrastructure mapping — and transmit portions of that data to cloud servers.

If the telematics control unit in a vehicle was designed or supplied by a company subject to Chinese jurisdiction, China's National Intelligence Law provides a legal basis for Beijing to request that company's cooperation in accessing the data those systems collect. The Cybersecurity Law (2016) and Data Security Law (2021) add further data localization and government-access provisions. Ford itself acknowledged in 2021 that vehicle data collected in China would be stored locally within that country, in compliance with Chinese law — an arrangement that technically demonstrates the legal access framework operating in real time.

In the most severe scenarios outlined by U.S. intelligence officials, this access goes beyond passive data collection. OTA update pipelines — the same mechanism that pushes software bug fixes to vehicle fleets — could theoretically be used to push malicious code to vehicles at scale, enabling remote disruption or takeover. Documenting a specific real-world incident remains classified or has not been publicly confirmed, but the structural vulnerability the pipeline creates is the reason the BIS rule and the CVSA 2026 exist.

What Is Already at Stake: Lincoln Nautilus and the 2027 Deadline

Ford's exposure is not only theoretical. The company is currently navigating a concrete regulatory challenge under the BIS rule: getting the 2027 Lincoln Nautilus cleared for import from China. The vehicle's connected software was developed in the United States but is installed in China, creating a nexus question under the BIS rule's "sufficient nexus" standard. Swedish automaker Volvo — majority-owned by China's Zhejiang Geely Holding Group — has secured Commerce Department authorization to continue importing and selling connected vehicles. Electric brand Polestar, also Geely-linked, was not so fortunate and has been forced to exit the U.S. market.

For Ford, the DOT letter arrives at precisely the moment when the company needs regulatory clarity, not public conflict. Every month of uncertainty about whether its Chinese technology partnerships will survive the legislative environment is a month in which Ford cannot finalize product plans, supplier contracts, or capital allocation for its electrification roadmap.

What This Means for Every Automaker

The DOT's formal warning to Ford matters beyond Dearborn. No major U.S. automaker building electric vehicles at meaningful scale has escaped meaningful engagement with the Chinese battery supply chain. The suppliers, the chemistry expertise, and the raw materials processing chain that makes LFP batteries economically viable are concentrated in China in a way that has no near-term equivalent in the United States, Europe, or allied nations.

The BIS rule and the CVSA 2026 together define a legal path to a Chinese-technology-free connected vehicle supply chain. The BIS rule already restricts Chinese software and hardware in connectivity systems effective from Model Year 2027. If the CVSA passes in its current form, it would extend those restrictions to vehicles themselves and lock in the 2030 hardware deadline in statute.

What neither instrument currently addresses is the battery chemistry concentration question. CATL's market position is not the product of predatory pricing alone — it reflects a decade of manufacturing scale, chemistry optimization, and supply-chain integration that has made its cells the default choice for cost-competitive EVs globally. The DOT letter implicitly asks Ford to treat that market reality as a policy problem to be solved by corporate willpower. Whether American battery manufacturing can close that gap before the legislative timeline demands it will determine whether Duffy's ultimatum was a warning or a deadline.

Frequently Asked Questions

Does China's National Intelligence Law actually require Chinese companies to hand over data on demand?

The law's Article 7 requires all Chinese organizations and citizens to "support, assist, and cooperate with national intelligence efforts." Scholars debate how broadly this applies in practice — some argue the provision lacks a direct enforcement mechanism and may not be intended to compel active data sharing. However, legal analysts broadly agree that direct requests from Chinese law enforcement or security agencies would be very difficult for any Chinese-headquartered company to refuse, regardless of where the company's servers are located or what its contracts say. U.S. government agencies treat the law as creating a real and operative access risk.

What data from my vehicle could be exposed if it contains Chinese-origin connected technology?

A modern vehicle's Vehicle Connectivity Systems — its cellular modem, GPS, Bluetooth, satellite, and Wi-Fi modules — continuously generate location data, driving patterns, and operational telemetry. Telematics systems transmit portions of this data to cloud infrastructure. If those systems incorporate components designed or supplied by an entity subject to Chinese jurisdiction, China's National Intelligence Law, Cybersecurity Law, and Data Security Law collectively provide a framework under which the Chinese government could request that entity's cooperation in accessing that data. The Bureau of Industry and Security's January 2025 rule restricts precisely these systems.

What would the Connected Vehicle Security Act ban, and when?

The CVSA 2026, which received unanimous Senate Commerce Committee approval on July 22, 2026, would prohibit the import, manufacture, sale, and resale of connected vehicles and their hardware and software components with ties to China or other foreign adversary nations. Software and vehicle restrictions would take effect beginning with Model Year 2027 vehicles. Hardware restrictions would follow in 2030. Both timelines mirror the existing BIS connected-vehicles rule, which the legislation would make permanent under federal law.

Is Ford alone in this situation, or do other U.S. automakers face the same supply-chain problem?

Ford faces the most direct public confrontation because of the DOT letter, but the underlying supply-chain challenge is industry-wide. Seven Chinese companies held a combined 72.8 percent of the global EV battery market in the first seven months of 2026, with CATL alone holding 39.9 percent. Any automaker pursuing mass-market electric vehicles at competitive price points has had to navigate the reality that the most cost-efficient battery technology and manufacturing expertise is concentrated in China. GM, Honda, Stellantis, and others all source battery components from or maintain licensing relationships with Chinese-linked suppliers, even as they publicly support legislation designed to restrict that technology.