Massive US Battery Plant Grinds To A Halt After Trump’s Tariffs

Rising tariffs are doing more than sparking political arguments, as hey’re reshaping where, how, and even if some companies build their next-generation manufacturing hubs. While former President Trump’s trade policies have nudged a few automakers toward building more vehicles in the United States, they’ve also sent car prices climbing and stirred chaos in the global auto market.

One of the latest casualties? A $1.6 billion battery factory in South Carolina, where construction is on hold before production has even begun.

Read: EV Support In America Is Falling Faster Than Anyone Predicted

In 2023, Automotive Energy Supply Corp., better known as AESC, began constructing a battery plant in South Carolina to supply BMW with cells for its electric vehicles, including the upcoming production models based on the Neue Klasse Vision concepts, the iX3 SUV and i3 sedan..Work on the physical buildings at the site is almost complete, but efforts to install equipment and establish assembly lines have been halted.

In a memo addressed to employees that was seen by The Wall Street Journal, AESC’s chief executive for the US and Europe, Knudt Flor, said work was being paused because of “economic uncertainty arising from current federal policy and tax issues.” However, he added that “Our intent is to finish construction of the facility once stability and predictability have returned to the market.”

According to the WSJ, AESC would face a substantial tariff bill if it were to import the necessary machinery from China. Additionally, separate tariffs on steel and aluminum could hurt the battery giant.

AESC announced its South Carolina plant while Joe Biden was still President and the administration was providing huge subsidies to attract battery manufacturers to the United States. Through the Inflation Reduction Act, the Biden administration helped attract more than $130 billion in investments across the automotive sector, with many focusing on batteries for electric vehicles.

Now, many subsidies are in the firing line of Republicans. A new bill proposes ending EV battery production subsidies a year early and making them unavailable to companies with ties to certain countries, like China. Although AESC is headquartered in Japan, it is majority-owned by the Envision Group in China.

“AESC has invested over $1 billion into the Florence facility, and we anticipate being able to resume construction once circumstances stabilize,” the company told the news outlet in a statement. “AESC fully intends to meet our commitments to invest $1.6 billion and create 1,600 jobs in the coming years.”