CATL, Gotion Under Scrutiny in US Over 'Use of Forced Labour'

Chinese battery-makers Contemporary Amperex Technology (CATL) and Gotion High Tech are facing scrutiny in the US, with a group of Republican lawmakers demanding they be blacklisted over their alleged ties to “state-sponsored slave labour programs”.

The lawmakers have called on the Joe Biden Administration to add the battery-makers to the US Entity List under the Uyghur Forced Labor Prevention Act, the Wall Street Journal reported.

The Entity List restricts the import of goods tied to what the US government has characterised as an ongoing genocide of minorities in China’s Xinjiang region. Beijing denies any abuses.

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The lawmakers said the firms, with ties to carmakers ranging from Tesla to Volkswagen, are linked to the Xinjiang Production and Construction Corps, a US-sanctioned paramilitary organisation in Xinjiang.

Those links mean CATL and Gotion’s supply chains are “deeply compromised,” lawmakers said.

The battery-makers must be blacklisted ‘to protect American taxpayers and US companies from being tainted by grave human rights abuses’, they added.

Gotion said the allegation that it “uses or is related to forced labour is baseless and absolutely false”. It added that it selects partners based on “strict review mechanisms and evaluation criteria”.

CATL also denied any suggestion that the company has used forced labour, or has any connection to forced labour, the WSJ report said.

Shenzhen-listed shares of CATL and Gotion were down 5.7% and 2.1% respectively, on Friday.

🚨BREAKING: In two letters to @DHSgov, Chairman @RepMoolenaar reveals shocking new evidence implicating Chinese battery manufacturers operating on U.S. soil, @Gotion48660 & @catl_official, in CCP state-sponsored slave labor and the ongoing Uyghur genocide. ⬇️… pic.twitter.com/cfPa1hY4qi

— Select Committee on the Chinese Communist Party (@committeeonccp) June 6, 2024

Links to Volkswagen, Tesla

CATL is the world’s biggest electric vehicle-battery maker, involved in the production and development of a range of batteries including cylindrical cells and solid state batteries.

The company has been supplying carmakers like BMW, Ford, Stellantis and Elon Musk-led Tesla.

Meanwhile, Gotion, a publicly traded company in China also known as Guoxuan High Tech Company, is partly owned by German automaker Volkswagen.

Volkswagen Group China said it has no evidence of human rights violations in connection with its business activities in China, a company spokesperson said in an emailed statement on Friday.

The carmaker is also investigating these allegations immediately, “as we have done it in the past”, the spokesperson added.

Volkswagen China Investment Co holds 26% of shares in Gotion, and the latter is not nominated for any US projects or import business into the country, the Volkswagen spokesperson said.

Volkswagen has previously come under scrutiny too for its operations in China’s Xinjiang. In February, reports emerged that forced labour was used in the construction of a test track for the carmaker in Turpan, Xinjiang, in 2019.

Both Gotion and CATL are currently setting up manufacturing facilities in the United States, and have faced significant pushback against their projects. If the battery-makers are added to the Entity List, it could hinder their planned expansions to the US.

Reuters, with additional editing by Vishakha Saxena

Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at [email protected]