A Chinese-owned Battery Plant in South Carolina Halts Construction

Wall Street Journal

9 hours ago

A Chinese-owned company is halting construction of an electric-vehicle battery plant in South Carolina, in part because of the Trump administration's tariffs and a potential loss of federal subsidies for clean energy.
Automotive Energy Supply Corp., or AESC, began construction of the $1.6 billion factory in Florence in 2023, after securing a deal with BMW to make battery cells for the German automaker.
In a message to employees on Thursday afternoon, AESC's top U.S. executive said the company was pausing construction work because of 'economic uncertainty arising from current federal policy and tax issues.'
'Our intent is to finish construction of the facility once stability and predictability have returned to the market,' Knudt Flor, AESC's chief executive for the U.S. and Europe, wrote in the memo.
While construction of the physical buildings is nearly complete, the work of installing equipment and assembly lines has halted, said current and former employees.
Some of the employees said AESC would face a hefty tariff bill for the machinery if they imported it now, because it is mostly brought in from China.
Tariffs on Chinese imports have fluctuated wildly since April, rising to as high as 145%, before falling again amid a truce between Washington and Beijing as the two sides try to come to an agreement.
Separately, tariffs on steel and aluminum recently announced by President Trump, as well as on machinery containing the metals, only adds to AESC's costs, two of the people said.
Battery plants were already under pressure before Trump's election, because carmakers had delayed or walked back their plans for new electric vehicles.
Billions of dollars were poured into building new battery factories in recent years, spurred on by the subsidies from the Biden administration. Many of these factories were constructed in the Midwest and Southeast of the U.S., in a region that came to be called the Battery Belt.
Now many of those subsidies are being targeted by Republicans at the same time regulations and tax credits aimed at driving EV sales are also at risk.
The current version of a tax bill before Congress would end EV battery production subsidies a year early and make them unavailable to companies with ties to certain countries, including China.
AESC's headquarters is in Japan, but it is majority-owned by China's Envision Group, which purchased the battery-making unit of Japanese automaker Nissan in 2018.
'AESC has invested over $1 billion into the Florence facility, and we anticipate being able to resume construction once circumstances stabilize. AESC fully intends to meet our commitments to invest $1.6 billion and create 1,600 jobs in the coming years,' the company said.
The AESC factory is supposed to supply battery cells to a new BMW factory in Woodruff, S.C. Under the original deal, these batteries were to power the German company's EV models that are expected to go into production starting in 2027.
BMW said its plans to open the Woodruff plant next year, as planned. It referred any questions about the AESC factory to that company.
Write to Christopher Otts at [e-mail]