Deep in the Heart of Texas: I Spy Something Red
Deep in the heart of Texas, more than 200 people gathered in Mesquite in late May to celebrate the opening of a green-energy factory.
Encompassing almost half-a-million square feet and retrofitted for up to $200 million, the plant will mass-produce large-scale lithium-ion batteries for U.S. utilities.
It will turn out 10 gigawatt hours of storage per year, a large chunk given industry plans to add almost 20 gigawatts of utility-scale storage in the full year 2025.
But rather than “Made In America,” this is more of a Chinese invasion.
The new plant is owned by a Chinese company: Hithium, which has ties to the Chinese government and the People’s Liberation Army, as well as state-owned entities investing in it.
It has been cited in various U.S. legislation aimed at banning Chinese battery makers from contracting with the U.S. government.
Yet, now Hithium will be producing storage for the U.S. electrical grid right here at home.
This may pose a security risk.
In May, Reuters reported that “rogue communication devices not listed in product documents have been found inside some Chinese solar power inverters by U.S. experts who strip down equipment hooked up to grids to check for security issues.”
The experts also found “undocumented” devices such as cellular radios in batteries from multiple Chinese suppliers.
“The discovery raises fears China may have installed covert malware in critical energy infrastructure across the US and Europe, enabling remote attacks during conflict,” says a follow-up report from securityaffairs.com.
Not even Hithium’s rivals in China trust the company.
It’s part of Xiamen Hithium Energy Storage Technology Co. Ltd., founded in 2019 by engineers who defected from the largest competitor, CATL of China.
CATL just sued Xiamen Hithium in the Fujian province, alleging poaching of CATL engineers and products. On Aug. 4, a senior executive at Hithium was detained by police in Ningde, China “after CATL reported him for suspected infringement of business secrets,” the Chinese business network Yicai reported.
None of this, however, has thwarted the company’s growth.
It just landed a contract to provide a 750-megawatt system to a supplier in the UK, and Hithium has filed for a new stock offering in Hong Kong, which may be imminent.
In Mesquite, Texas, plans for the new factory were unveiled in July 2024 — just one month following a U.S. House committee passed a new bill, H.R. 8631, “To prohibit the Secretary of Homeland Security from procuring certain foreign-made batteries.” (Italics added).
The bill would bar China-produced gear made by Hithium and five other Chinese battery makers; it stalled in committee.
Moreover, in December 2023, Congress passed the National Defense Authorization Act, which in Section 154 bans Hithium and five other Chinese battery makers from contracting with the U.S. Department of Defense, effective in October 2027.
This, because of their ties to the Chinese government and military.
As well, Hithium is named as a banned Chinese contractor in a bill known as H.R. 1166, the Decoupling from Foreign Adversarial Battery Dependence Act, which was introduced in the House in February of this year.
The company, with revenue of $1.8 billion last year, rapidly has grown into the world’s No. 3 maker of BESS (Battery Energy Storage System), lithium storage systems for solar and wind.
In its latest investment round (series C), in 2023, Xiamen Hithium raised $620 million, much of it from firms linked to the Chinese government, including:
The China National Defense Investment Fund, a state-backed fund aimed at modernizing the People’s Liberation Army; and a fund owned by the government of Xicheng District, Beijing; and China Life, a state-controlled life insurance company; and a unit of the government-controlled Bank of China.
Moreover, like all Chinese companies, Hithium must abide by China law requiring it to help government intel agencies spy as needed.
It must “support, assist, and cooperate with national intelligence efforts in accordance with the law,” as stated in Article 7 of the National Intelligence Law, adopted in 2017.
At least five battery factories in the U.S., built or in the works, are owned and operated by Chinese firms with ties to the Chinese government.
Particularly galling, U.S. taxpayer dollars are subsidizing these Chinese-owned projects.
The Hithium factory may qualify for up to $100 million a year in tax incentives under the Inflation Reduction Act.
A rival, Gotion Inc.— which also is listed as a banned Chinese supplier in U.S. legislation — is investing $2 billion to build a site in Mantano, Ill., which will employ 2,600 people; it was enticed by $175 million in state funds.
In Big Rapids, Mich., Gotion is spending $2.4 billion on a site for EV battery production, set for completion in 2027. At 2,350 jobs, it is supported by $715 million in state incentives.
CFIUS, the Committee on Foreign Investment in the U.S., has oversight when a Chinese company tries to buy a stake in a U.S. company, but these ventures are 100%-owned enterprises, so they fly below the radar.
That’s one big loophole.
Congress acted to force the ByteDance, the China-based owner of TikTok, to sell out to a U.S. concern.
Securing the electrical grid, especially given the prospects for an all-out war someday with China, seems a bit more important.
Dennis Kneale, a former anchor at CNBC and Fox Business, is host of the “What’s Bugging Me” podcast on Ricochet and author of “The Leadership Genius of Elon Musk.” Read Dennis Kneale’s Reports —? More Here.
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