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The world’s largest electric-vehicle (EV) battery maker is getting bigger. Whether it can maintain its global reign will come down to Beijing’s tolerance of a private monopoly in a key industrial sector. China’s Contemporary Amperex Technology (CATL) announced late last month that it was investing nearly $3.8 billion to expand battery capacity in Sichuan province and maintain its global dominance. It has begun work on an industrial park in Hubei to eventually power as many as 4 million EVs. It’s also looking at factory sites in Poland for a total investment of around €2 billion, while Hungary is vying for a role in CATL’s expansion plans, too. There’s also a plant underway in Germany.

With this unchallenged momentum, CATL supplies a host of big car companies and EV makers globally, including Tesla Inc. The Ningde-based firm’s heft has been well documented: It is the world’s largest profitable powerpack maker.

This might could become the firm’s most pressing problem yet, given Beijing doesn’t have a great track record of allowing the dominance of private enterprises. It doesn’t help that CATL’s chairman, Zeng Yuqun and his top executives have been big beneficiaries of its rallying stock price. With China focused on anti-trust measures and the resultant troubles of its tech giants, it’s worth wondering whether President Xi Jinping can stomach one company having such a tight grip on market share in what has been deemed an essential sector.

Anti-monopoly rhetoric in China has gone beyond online platforms. In December, the head of its new bureau tasked with keeping an eye on concentrated market power said China would step up supervision and law enforcement to regulate areas like tech innovation and information security. The official said the body would “continue to strengthen review of cases related to the concentration of operators to prevent disorderly expansion of capital." This logic, in theory, extends to CATL and Beijing might become uncomfortable with its power. Bad actors or not, no amount of good will or international clout helps, as the experience of HNA and Evergrande has shown.

While CATL has been a beneficiary of the state’s largesse and EVs, Beijing hasn’t let it run free. In November, the Shenzhen Stock Exchange raised questions about a close to $9 billion equity offering the company was planning and asked whether it was raising funds “excessively." Soon after, the battery maker slashed its fund-raising by billions of yuan and cut back on allocations to two projects, along with working capital. In its response to the exchange, the company said its current assets were not enough for the planned expansion.

What’s more concerning is the ecosystem of component suppliers that has grown around CATL and are highly dependent on it. It has started to look like a winner-takes-all model. Yunnan Energy New Material Co, a maker of battery separators, announced it had signed a contract with CATL. The order is a significant chunk of the firm’s capacity and CATL is offering a prepayment to ensure production and supply. Other firms like Jiangsu Dingsheng New Energy Materials Co and Jiangsu Guotai International, which is expanding its facilities in Ningde and Poland, make up the hive around CATL.

While that speaks to an efficient and reliable network of supplies for CATL, it’s also a system in which several companies lean on one main firm as their source of revenue. At a time when supply chain financing for manufacturers has been tight and raw material prices are shooting up, that becomes dangerous. Any weakness in demand, or snarls in electric vehicle plans, and it could go pear-shaped.

Yet, CATL represents China’s path to dominance of the global EV battery industry and the new energy sector more broadly. No country or company comes close to this level of scale or efficiency. One reason Tesla has been able to get its cars on roads across the world is because CATL was able to produce at scale the batteries required—a surprisingly difficult feat. It’s also an example of how an important and crucial part of this process is in China’s hands.

Beijing may have other plans, though. For instance, it wants to create an industrial complex comprised of powerful small- and medium-sized enterprises that are dominant players in niche sub-sectors, as it did with traditional auto parts, in order to spread the wealth. But even then, it ended up with one or two dominant companies like glassmaker Fuyao Glass Industry, instead of a handful of top-notch suppliers. Or it may want several, large battery manufacturers—backed by the state—instead of just a couple of private firms.

But getting in the way of CATL at such a crucial point of the global EC cycle would be foolish, because China would lose out on the one chance it finally has to prove its industrial brawn.

Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia

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