A key partner for Elon Musk’s Tesla is threatening to sue the U.S. government over the Pentagon’s decision to blacklist it from federal contracts, blasting it a “mistake”.

Ford has a licensing agreement to manufacture electric vehicle batteries with technology from a Chinese company that's under scrutiny at the Pentagon.

The U.S. Defense Department added CATL and Tencent Holdings, to its annual list of companies alleged to have ties to China's military.

But spokesman Mark Truby noted that the Marshall site will be a Ford-owned plant with Ford employees. In the past, Ford has said that it believes licensing the technology from CATL and manufacturing the batteries in Michigan will support a strong U.S. manufacturing base and is preferable to importing batteries from China.

The Pentagon's running list of companies with ties to the Chinese military now includes CATL, an integral partner to some U.S. automakers.

The Defense Department has added dozens of Chinese firms to a list of companies that are prohibited from working with the Pentagon and defense industry due to their alleged ties with China’s

The addition of Contemporary Amperex Technology Co., Limited (CATL) to a Chinese military-linked entities list has thrust Tesla’s reliance on the Chinese battery giant into the spotlight. While the designation currently imposes no direct sanctions,

The Pentagon recently added Tesla’s battery suppliers, Contemporary Amperex Technology, and Tencent to its list of companies with ties to the Chinese military. While the designation has minimal direct business impact,