Congressional committee calls for Chinese battery plant funding cut

The House of Representatives Select Committee on the Chinese Communist Party (CCP) has urged the US government to cut off federal support for Chinese battery companies in the US, after Anhui Province-founded Gotion announced plans for a $2bn battery plant in Illinois.

The call comes amid worries about the increasing Chinese presence in US clean energy manufacturing, including the full EV supply chain. These concerns are based on both competitive and national security grounds.

The bipartisan committee, comprised of 11 Democrat and 13 Republican members of Congress, is taking aim at what it says are Gotion’s links to both the Chinese government and Chinese state financial institutions. These connections can result in Chinese firms having several advantages over US competitors, including access to credit at below-market rates, tax breaks and subsidies, often predicated on full or partial government ownership of companies.

“Gotion High-Tech is a PRC company that has direct ties to the CCP and state-owned financial institutions. Gotion has been an active participant in the PRC-based version of the “Thousands Talents Programme” a programme the FBI itself says encourages theft of trade secrets and economic espionage,” the committee wrote in a letter to US Treasury Secretary Janet Yellen.

As such, the committee asks Congress to “mandate that these types of transactions are subject to national security screening procedures and review.”

This marks the second time that congressional committees have called for investigations into Chinese presence in the US battery industry. In July, two House committees announced investigations into OEM Ford’s plan to build a battery plant in Michigan with Chinese battery heavyweight Catl.

Tax dollars

“The Treasury — as one of the primary implementing agencies behind the Inflation Reduction Act (IRA) — may be offering Gotion large government subsidies for the project", the committee fears, which could undercut the entire strategic purpose of the US’ attempted pivot away from reliance on China in key parts of the EV ecosystem.  

“The US is locked in a fierce competition to prevent the PRC from dominating the key technologies of the 21^st century, investing billions to reduce the CCP’s chokehold over critical supply chains. It is highly concerning that the US government would facilitate this chokehold by actively supporting CCP-backed companies expanding their foothold in the US market,” the committee cautions.

The IRA specifies that, by 2025, any vehicle eligible for subsidies “may not contain any critical minerals that were extracted, processed, or recycled by a foreign entity of concern”, which includes China. But the effectiveness of the legislation comes into question if, for example, batteries are made in the US using IRA-compliant Australian lithium and Japanese microchips, but are based on underlying Chinese IP.

Gotion is, though, a textbook example of how difficult it will be for the US — or indeed the EU — to fence China out of what is already a globalised market. For one thing, Gotion has its international headquarters in California.

And its largest single shareholder, after a nine-digit-dollar deal in 2020, is Germany’s Volkswagen. The firm has just begun producing its first batteries at a new 20GWh/yr factory in Goettingen in the German state of Lower Saxony, boasting that localised production and supply means the batteries qualify for a ‘Made in Germany’ label.

Gotion signed several contracts with additional partners on the inauguration of its new plant, which was attended by the state governor — no doubt attracted by the promised €2bn annual output value and the fact that the new factory replaces an obsolete facility and supports a more general ICE-to-EV futureproofing.

Unpicking existing and planned Chinese battery investment that have promised politically attractive benefits like investment and jobs, on either side of the Atlantic may be easier demanded than done.