THREAT ASSESSMENT: China’s Dual-Use Battery Dominance and the Risk of Allied Supply Chain Collapse
If South Korea maintains its current import policies toward Chinese battery manufacturers, then the ex-China supply base risks losing its most technologically capable partner, undermining the scalability of allied defense-grade production networks.
Bottom Line Up Front: China’s accelerating dominance in dual-use battery technology threatens to undermine U.S. and allied military readiness, economic competitiveness, and supply chain resilience, particularly as Chinese firms gain market share in South Korea—the second-largest battery power—potentially cementing a global monopoly with severe national security implications [Atlantic Council, 2026].
Threat Identification: China is rapidly consolidating control over the entire dual-use battery supply chain—from raw material processing to advanced manufacturing—enabling superior military applications in drones, robotics, naval systems, and AI-driven platforms. Chinese firms like CATL and BYD are leveraging overcapacity, low pricing, and aggressive export strategies to penetrate key markets, including South Korea, where Chinese EVs captured 30.9% of registrations in Q1 2026. This expansion threatens to displace allied producers and erode non-China (ex-China) supply chains essential for defense autonomy [Atlantic Council, 2026].
Probability Assessment: High probability within 1–3 years (2026–2029). Chinese domestic battery production grew 46% from 2023 to 2024, with 60% overcapacity driving exports. With no major trade barriers from Seoul and weakening U.S. EV demand due to expiring tax credits, Chinese firms are poised to dominate both commercial and defense-adjacent battery sectors globally by 2030, especially if solid-state advancements are commercialized as projected [Atlantic Council, 2026].
Impact Analysis: A Chinese monopoly would compromise U.S. Department of Defense (DOD) supply chains—where up to 4,000 battery types are used—many with opaque origins and likely Chinese content. Military capabilities such as FPV drones, XLUUVs, and robotic systems would face operational risks due to dependency on adversarial suppliers. Loss of South Korean market leadership would collapse the backbone of ex-China capacity, weakening allied resilience and enabling strategic coercion during crises, particularly in a Taiwan contingency [Atlantic Council, 2026].
Recommended Actions: (1) The U.S. must eliminate tariffs on South Korean battery imports to strengthen allied cohesion; (2) Launch a joint U.S.-ROK advanced battery initiative focused on solid-state and lithium-sulfur chemistries; (3) Expand cooperation in upstream mining (e.g., Australia, Argentina, Indonesia) through shared financing via EXIM and DFC; (4) Integrate South Korean refiners (e.g., POSCO, Korea Zinc) into Pentagon supply chains with defense-grade standards; (5) Establish visa and labor protections for South Korean technical personnel in U.S. defense manufacturing; (6) Mandate full supply chain transparency for all dual-use batteries in DOD procurement [Atlantic Council, 2026].
Confidence Matrix: Threat Identification – High confidence (based on market data and public disclosures); Probability Assessment – High confidence (supported by production growth and export trends); Impact Analysis – High confidence (validated by DOD dependency and military use cases); Recommended Actions – Medium to High confidence (feasible with political will and existing frameworks like BEACONS and Minerals Security Partnership) [Atlantic Council, 2026].
Published June 13, 2026