Critical minerals: Supply chains under pressure

EVs begin with geology and chemistry. Lithium, nickel, cobalt, graphite and rare earths not only determine prices, they expose supply vulnerabilities. FDI authorities focus on control and denial of access. Concentration of mining and refining capacity in a handful of jurisdictions generates classic leverage risks – export restrictions, price manipulation or discriminatory supply cuts to advance foreign-policy goals. Refineries, precursor plants and long-term take-or-pay contracts can all become single points of failure, even for downstream facilities in friendly markets.

China recently wielded its dominance in rare earth materials – and their critical role across defense, semiconductor, auto, and “clean” energy sectors – as a geopolitical instrument against the United States. Throughout 2025, there has been a complex interplay between escalating Western restrictions on China and retaliation by China in the form of progressively tightening export controls on rare earth minerals. Most recently in October 2025, China tightened controls on rare earth materials ahead of high-level trade negotiations with the United States, subsequently suspending the controls as part of such negotiations. These moves underscore the fragility of global supply chains and the continued importance of critical-minerals security in FDI assessments.

This importance has been institutionalized by governments in investment policy through multiple mechanisms. President Biden's 2022 Executive Order on the Committee on Foreign Investment in the United States (CFIUS) directed CFIUS to scrutinize critical mineral transactions. The Trump administration has directly acquired equity stakes in rare earth producers. Meanwhile, Canada and Australia have blocked or forced divestment of Chinese investments in lithium and rare earth mining, signaling that critical mineral security now overrides traditional open-investment policies.

Production: Where clean tech meets hard power

The middle of the EV value chain – from R&D and component manufacturing to final assembly – brings dual-use technology concerns to the fore. Wide-bandgap silicon-carbide power modules used in EV inverters can also harden radar and directed-energy systems against thermal stress. High-density battery-management algorithms developed for passenger vehicles can manage silent-running submarines or forward-operating microgrids. Compact LIDAR and vision-fusion systems that guide autonomous vehicles can provide terrain-following and target-acquisition capability for unmanned ground vehicles and precision-guided munitions.

In the US, a 2024 battery plant project in Michigan backed by Chinese company Gotion drew congressional attention after CFIUS determined it lacked jurisdiction to review because the project was a greenfield investment outside its real-estate authority. The controversy prompted the addition of the nearby Camp Grayling military installation to the list of “extended range” facilities that can trigger review, and renewed discussion of whether CFIUS’s remit should expand to certain greenfield projects. Investors should use diligence not only to understand what a target’s technology does today but what it could do tomorrow; even potential dual-use applications can shape regulatory perceptions of risk.

In China, the EV sector has been a strategic pillar of national economic policy for years. A foreign investor’s acquisition of control of a Chinese business active anywhere along this chain – from batteries to microcontrollers or power semiconductors – could trigger review. With global competition intensifying, transactions in the EV space are becoming enforcement priorities for FIR authorities worldwide. The Dutch government’s intervention in the management of Nexperia, a Chinese-owned producer of chips widely used in the auto sector, illustrates that intervention risk can persist long after closing.

Operation: Smart cars, smart grids, soft targets

Once EVs reach consumers, national security focus shifts to data access and infrastructure integrity. EVs are mobile sensor platforms transmitting location, usage and diagnostics data, along with continuous over-the-air updates. Such data has intelligence value: it can reveal movement patterns or enrich other datasets through AI-enabled analytics.

A consortium that included Chinese investors reportedly abandoned a planned minority investment in automotive-mapping company after encountering CFIUS concerns – an example of how data exposures alone can derail a deal. Across other jurisdictions, including EU member states and China, questions around the access, collection, processing and cross-border transfer of geolocation information and/or personal data remain central to FDI scrutiny.

Authorities also view the interface between EVs and the power grid as a potential high-impact, low-probability risk. Each EV is both a load and, with vehicle-to-grid or vehicle-to-home capability, a potential storage node. If an adversary were to embed backdoors or other supply-chain compromises into charging-network backends, over-the-air (OTA) update servers, or widely-deployed telematics and Electric Vehicle Supply Equipment components, they could issue coordinated commands to disable or simultaneously charge cohorts of vehicles and chargers under that vendor’s control. Such an attack could overload distribution equipment and protection systems, trigger localized outages and even contribute to wider frequency excursions across already stressed power systems.

Remote-disable or authentication-corruption attacks targeting vehicle powertrains or charging authentication systems are also technically feasible where vehicles share a common vulnerable supplier or platform. Concentrated in dense urban areas with high EV adoption, such attacks could disrupt transportation, logistics and emergency response within affected regions.

With thanks to Freshfields Ninette Dodoo, Aimen Mir, Colin Costello, Tracy Lu, Andrew Gabel and Ziqi Zhou for their contributions to this update.