BYD Sues DoD Over Military Company Label Hindering Lobbying Efforts
Chinese automaker BYD sued the U.S. Department of Defense over its military company designation.
Why it matters: Foreign companies labeled as Chinese military firms face strict lobbying prohibitions under U.S. law, creating complex compliance challenges for legal teams advising corporations on regulatory risk and government relations.
- BYD filed its lawsuit in the U.S. Court of Federal Claims on September 29, 2026, contesting its June 2026 classification as a Chinese military company by the DoD.
- The designation stems from Section 851 of the 2025 National Defense Authorization Act (NDAA), which bans DoD contracts with firms using lobbyists representing Chinese military entities.
- On June 8, 2026, the DoD published a list of 188 designated Chinese military companies, including BYD, Alibaba, and ChangXin Memory Technologies.
- Other affected companies, such as Alibaba and CXMT, have also initiated legal challenges against the DoD's designation and lobbying restrictions.
BYD, a leading Chinese electric vehicle manufacturer, has taken legal action against the U.S. Department of Defense (DoD) challenging its inclusion on the DoD's list of Chinese military companies. The lawsuit was filed in the U.S. Court of Federal Claims on September 29, 2026, following the DoD's June 8 announcement designating 188 Chinese firms as military entities under Section 851 of the National Defense Authorization Act (NDAA) for Fiscal Year 2025.
Section 851 prohibits the DoD from contracting with any entities that employ lobbyists to represent Chinese military companies, with compliance effective from June 30, 2026. This provision has had real-world effects, as lobbying firms reportedly ended contracts with BYD following the designation.
The NDAA’s intent is to curtail the influence of companies the U.S. government deems tied to China's military apparatus. However, BYD argues its classification "lacks factual and legal basis," citing the broader impact on its business operations and reputation in the U.S. market. Similar lawsuits by Alibaba and ChangXin Memory Technologies (CXMT) echo this stance, challenging the DoD's criteria and transparency in designations.
Legal professionals advising multinational corporations must navigate these evolving regulatory frameworks carefully. The cases highlight urgent compliance considerations around lobbying laws, contract eligibility, and reputational risk management for companies labeled under national security statutes.
As the litigation unfolds, courts will play a crucial role in clarifying the scope and applicability of Section 851, potentially influencing U.S.-China business relations and regulatory enforcement strategies.
By the numbers:
- 188 — Number of Chinese companies designated as military entities by DoD in June 2026
- June 30, 2026 — Compliance deadline for NDAA Section 851 prohibiting contracts with represented military entities
- September 29, 2026 — Date BYD filed its lawsuit against the U.S. Department of Defense
Yes, but: Although the lawsuits challenge the DoD's designations, the underlying policy reflects ongoing U.S. concerns about Chinese military influence and national security, meaning courts may defer to executive assessments.
What's next: The U.S. Court of Federal Claims is expected to review BYD's case in early 2027, with potential rulings to shape the enforcement of NDAA Section 851 and lobbying restrictions for foreign companies.