40 Billion Project Investment Cancelled! Sino-US Battery Game Escalates, How Can Top-Tier Enterprises Break Through?

Like high-end chips, power batteries are becoming one of the trump cards in the geopolitical game between China and the US. With the inauguration of US President Trump, the development of China's relevant industries and the globalization layout of its enterprises have been severely affected.

It is worth noting that Trump administration's "moves" against power batteries not only seriously undermined the strategic planning and development of US EV enterprises, but also significantly impacted the pace of electrification transformation in the US automotive industry.

According to joint statistical data from Rodeo Research and the MIT Center for Energy and Environmental Policy Research,since Trump took office, the total value of battery factory projects canceled in the US in the first quarter of this year has exceeded $6 billion (approximately RMB 43.1 billion).

On May 22, the "One Big Beautiful Bill Act" (OBBB Act) narrowly passed in the US House of Representatives. This bill will significantly reduce clean energy subsidies in the Biden administration's Inflation Reduction Act (IRA), "including early termination of subsidies and restrictions on foreign entity participation."

In August 2022, then-US President Biden signed the Inflation Reduction Act, proposing that "US consumers can enjoy a $7,500 tax credit when purchasing or leasing an EV." Meanwhile, the Biden administration also issued a joint statement with multiple automakers, including General Motors, Ford Motor, and Stellantis, aiming to achieve a target of zero-emission vehicles accounting for 40%-50% of total new vehicle sales by 2030.

However, upon taking office, Trump immediately announced a "temporary suspension" of the Inflation Reduction Act and the abolition of the "target of 50% EVs in new vehicle sales by 2030."

In addition to canceling tax credits, Trump also imposed hefty tariffs on the import of key EV parts.In April this year, Trump officially signed an executive order on "reciprocal tariffs," announcing a 10% "minimum benchmark tariff" for all trading partners and higher tariffs for multiple trading partners.

How can the US battery industry's dilemma be resolved? Envision breaks through with a "balanced approach"

Affected by the "reciprocal tariff" policy and the proposal to cancel tax credits in the IRA, an increasing number of battery industry chain enterprises involving China have slowed down the construction pace of their factories in the US or are reevaluating their investment plans.

The first to be impacted is Ford Motor's battery project in the US. Originally, Ford planned to invest $3 billion in building a battery factory in Marshall, Michigan. The factory was scheduled to start production next year, manufacturing battery cells for EVs using licensed technology from China's CATL. If the OBBB bill is officially passed, the project will no longer be eligible for federal subsidies.

William Clay Ford Jr., the executive chairman of Ford, expressed his concern, saying that the cancellation of subsidies "will put our Marshall project in jeopardy." He emphasized, "Our investment decisions were made based on the policy environment at that time. It's unfair to face policy changes after we've already invested funds."

It is reported that Group14 Technologies, another US-based battery materials startup, has also postponed the construction of its battery materials factory in Moses Lake, Washington. The reason is that its Chinese suppliers are unwilling to bear the potential hefty tariffs. "The threat of tariffs exceeding 100% has already raised alarm among Chinese customers. Everyone is saying, 'Let's wait and see first.'"

In addition to domestic US companies, Yuki Kusumi, the CEO of Panasonic Holdings, one of the most prominent foreign battery companies currently established in the US, recently stated that the company will postpone the construction of its third battery factory in the US and focus on the commissioning of its second factory in Kansas.

The latest example is AESC, the world's first company to achieve large-scale power battery production in the US, which has recently optimized its strategic layout in the US based on actual conditions: It has proactively accelerated its energy storage business. The energy storage production line at its Tennessee factory in the US has already commenced production in April this year and is ramping up production capacity. At the same time, it has suspended its power battery project and will prudently evaluate the construction of its battery factory in South Carolina (referred to as the South Carolina factory) until the US market policies become clearer.

It is reported that AESC's Tennessee factory is the first energy storage battery cell factory to commence production in the entire North American market. Its products will be delivered to leading energy storage integration customers to meet the urgent demand for high-performance energy storage products in North America and effectively support its market expansion in the region. Public information shows that AESC is the world's first company to mass-produce 300+Ah and 500+Ah energy storage battery cells. In 2024, its overseas shipments of energy storage battery cells ranked among the top three globally.

On one hand, Trump advocates for "America First," aiming to build a localized battery industry chain and reduce dependence on China. On the other hand, given China's deep dominance in the industry landscape, if the US completely cuts off cooperation with China, it will not only struggle to form a competitive industrial system in the short term but may also fall further behind China in the EV sector.

Globalized Layout Becomes the "Key" to Risk Resistance

As early as October 2022, the BMW Group announced that it had selected AESC as the power battery supplier for its new-generation pure electric platform. The car models covered by the cooperation include the X7 and X3 for the global market, as well as the X5 and X6 for the North American and Latin American markets.

In February 2023, US automotive giant Ford Motor Company announced plans to collaborate with CATL, investing $3.5 billion to establish a factory in Michigan for producing LFP batteries for EVs. In the same year, US EV producer Rivian announced a partnership with Gotion High-tech, which would build a large-scale battery and material production site in the US...

The uncertainty of US policies has introduced significant unpredictability to the regional supply chain security of international mainstream automakers from a global perspective.

However, despite this, leveraging their global layout advantages, some top-tier battery enterprises have developed strong resilience against risks.

Despite facing short-term adjustments due to policy fluctuations, AESC stated that it would ensure the realization of production capacity at its two newly built factories in South Carolina and Kentucky, US. The 46-series large cylindrical batteries originally planned to be produced by AESC's South Carolina factory for BMW would now be supplied steadily to BMW's 46-series large cylindrical batteries through its global production capacity network.

Recently, AESC's 46-series large cylindrical battery products have been mass-produced and rolled off the production line at its super factory in Jiangyin, Wuxi, and delivered to BMW's global EV platform car models.Meanwhile, AESC is accelerating the deployment of more efficient production lines at its super factory in Cangzhou, with mass production expected to commence in H2 2025.

The series of rapid adjustments made by AESC and other enterprises in the US are rational decisions based on "policy uncertainty" and "cost sensitivity."

As one of the battery technology companies with the earliest global layout and comprehensive coverage of mainstream markets, AESC currently has multiple battery manufacturing bases in China, Japan, the US, the UK, France, and Spain. In the past year, AESC's battery super factories in Cangzhou, China, Ibaraki, Japan, and Douai, France, have all commenced production, while its battery factories in multiple countries including the UK and Spain will also start production sequentially.

Despite the challenges of policy adjustments and market fluctuations in the US market in the short term, most enterprises' strategic layouts on a global scale have not undergone significant changes, and they remain confident in the long-term development of the global power battery and ESS markets. Building a more resilient global production network to withstand future market uncertainties has increasingly become a common consensus among most players.