- AESC has stopped construction on two U.S. battery manufacturing facilities.
- The company was in the process of investing $3.6 billion in the two new factories.
- This is seen as a direct result of import tariffs and the cooling of EV demand in the United States.
The Chinese-owned battery manufacturer Automotive Energy Supply Corp. (AESC) had big battery manufacturing plans in the United States. It was building several plants to supply EV batteries, but after last year, it stopped work on one facility, and it has now put construction on hold at a second location.
AESC was in the process of investing $3.6 billion to build the two plants in Kentucky and South Carolina. But after import tariffs were introduced last year, importing the machinery necessary for its factories became much more expensive—machinery imported from China is subject to a 145% tariff. AESC also reportedly rushed construction and then had to implement expensive changes, which was a further setback.
The company has one U.S. battery plant online, in Tennessee. But instead of producing EV battery packs, it was repurposed to make industrial energy solutions instead. This likely came as a direct response to cooling EV demand in the U.S. and policy changes that specifically targeted EVs. The proposed rollback of some emissions standards and goals will further disincentivize the creation of new manufacturing for the EV supply chain.
Despite securing over $150 million in public funding and landing contracts to supply EV battery cells to Mercedes-Benz and BMW, AESC has considerably scaled back its plant-building plans in America. However, the company says it’s still committed to completing these factories and giving manufacturing jobs to thousands of people.
Pivoting to produce industrial energy storage, like it is doing in Tennessee, is a way to bring in some additional funds, which AESC needs in order to finish construction. According to the Wall Street Journal, AESC is also looking to get a loan to finish its South Carolina factory, which is supposed to supply BMW’s Smyrna plant, where it will begin EV manufacturing next year.
The Washington Post says that in the first three months of 2025, some $6 billion in battery manufacturing plans were scrapped across the country. This is at odds with the Republican narrative that the measures being enforced are meant to bring back manufacturing jobs, as it seems to be having the opposite effect.
Oregon Senator Ron Wyden commented on the matter at a news conference, telling the Post: “Hundreds of thousands of manufacturing jobs in the U.S. are now in danger. My own view is that projects all over the country are being canceled as we speak.”
The EV federal tax credit that the Trump administration is looking to abolish, along with other measures that encourage EVs, gave incentive for carmakers to build EVs in the U.S., source their components locally and create a supply chain to sustain the segment, which seemed burgeoning around 2022 when so many of these big battery investments were emphatically announced.