China’s export controls may end the era of ‘de-risking from China’ with Chinese technology
Beijing’s battery export controls threaten the West’s push for clean energy independence
Wuxi Lead is the world’s largest producer of battery-making equipment — and its customers include nearly every major electric vehicle and battery manufacturer on the planet.
It supplied machines to the struggling Swedish startup Northvolt, which set out to create a European battery champion to challenge Asia’s dominance in the sector. It also provides equipment to French battery company ACC, according to its Hong Kong IPO filing. ACC, which is backed by Stellantis, Mercedes-Benz, and TotalEnergies, aims to “reduce reliance on non-European suppliers” and build European technological independence.
Yet China’s latest export controls, released this week by the Ministry of Commerce, threaten this business and highlight the fragility of trying to “de-risk” from China using Chinese equipment and technology.
Shares in Wuxi Lead Intelligent Equipment fell 13% on the news.
It’s always jarring to visit European startups who speak about “reducing reliance on China,” while standing in factories filled with machines labeled in Chinese.
If the West truly wants clean energy independence, it needs to build supply chains all the way from the mine to the battery and the car without Chinese technology. That’s an enormous challenge, both in cost and in machine availability. Right now, that independence doesn’t exist.
Wuxi Lead’s customers include Tesla, Volkswagen, BMW, Mercedes, Toyota, LG Energy, SK On, Samsung SDI, Panasonic, ATL, and ACC. That is basically every major company involved in building Western battery supply chains.
China’s New Controls
China’s latest export restrictions are of course an attempt to gain leverage ahead of an expected meeting between President Donald Trump and President Xi Jinping. But the message is clear: Beijing intends to protect its technological edge in clean energy and critical minerals, not enable alternative supply chains abroad.
China’s dominance in heavy rare earths and magnet production gives it a powerful hand to play against the United States.
Yet Chinese companies themselves are desperate to expand overseas, especially in Europe, where margins are far higher than at home. In China’s ultra-competitive domestic market, survival is tough and profits are thin.
That is why Wuxi Lead is filing for a Hong Kong IPO, and says it wants to “accelerate” its efforts in overseas markets. Its share of revenue from overseas operations rose from 9% in 2022 to 24% last year.
This creates a fault line for Chinese industry: they need to invest and grow overseas — but without letting their core technology slip out of China.
Wuxi Lead’s own statement captures this tension:
“Our current overseas orders are primarily derived from the overseas expansion of domestic battery manufacturers, which do not fall within the scope of the controls. Generally, the company would not pursue relevant business involving sensitive overseas regions or sensitive customers. Yesterday’s notification merely implements export control; it does not prohibit exports. Export business can be carried out through a normal application process.”
Restricting Battery Tech
The Ministry of Commerce’s new order adds export controls on lithium-ion batteries with an energy density higher than 300 Wh/kg — mainly next-generation solid-state batteries and premium nickel cobalt manganese (NCM) cells.
It also expands controls to equipment for manufacturing lithium-ion batteries, including winding and stacking machines, as well as machinery for producing cathode and anode materials. (You can read a full translation on Fred Gao’s Substack.)
The result is that China’s controls may force the West to accept investments from Chinese companies in order to build electric vehicle and battery supply chains. These may be the only companies granted licenses to export such machines and technologies.
That’s already happening. Recent deals include a tie-up between China’s Shanshan and France’s Imerys to make synthetic graphite materials in Europe.
But these joint ventures will remain under Beijing’s control through the power to grant or withhold export licenses. If a European government takes a stance China dislikes, those licenses could simply be withdrawn.
That’s the leverage China holds over the clean energy transition.
It was naive to think that clean energy would free us from energy politics. In reality, the West is becoming even more entangled and more dependent on China.
China has had a long and deliberate strategy to dominate the clean tech space which has been aided and abetted by American party political flip flopping on the importance of the space. China are now in a commanding position and to put it in the parlance favoured by the US president, “they hold all the cards”