The recent surge in U.S. battery manufacturing, fueled by strong incentives under the Biden administration and Congress, is now hitting significant roadblocks. Rising trade barriers and stricter policies aimed at limiting China’s role in the U.S. battery supply chain are causing companies nationwide—from South Carolina to Washington state—to slow or reconsider investments in battery factories and raw material production.
Key challenges include:
Trade tensions with China: Increased tariffs and restrictions are disrupting supplier-customer relationships critical to battery production, as China remains the world’s largest battery producer and dominates many component markets.
Republican-led policy restrictions: The House-passed domestic policy bill includes provisions blocking federal tax credits for battery manufacturers linked to Chinese companies or relying on Chinese technology or materials.
Weakened EV market: Slower growth in electric vehicle demand further pressures battery manufacturers, already vulnerable to policy uncertainties.
The dilemma is stark: while the U.S. aims to build a strong domestic battery industry and reduce reliance on China, experts warn that completely cutting ties may be impractical given China’s dominance and integration in the supply chain.
Notable impacts
Ford’s $3 billion battery plant in Marshall, Michigan, which licenses technology from Chinese giant CATL, risks losing subsidies, threatening jobs and investment plans.
Battery maker AESC recently halted its $1.6 billion EV battery plant construction in South Carolina, explicitly citing policy and market uncertainties.
Experts emphasize that for a sustainable domestic industry, the U.S. must develop its own supply chain and expertise, even if it means relying on foreign parts and technology in the near term — mirroring China’s earlier strategy in the auto sector.
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