The Electric: How States And Companies Are Frustrating Efforts to Create a China-Free U.S. Battery Industry

Over the last five months, Joshua Hundt and his Michigan negotiating team have outcompeted a dozen U.S. states to land two multibillion-dollar battery factories. But there’s a catch: Both plants involve Chinese companies, clashing with a new U.S. law that aims to exclude them from the U.S. battery industry. 

Hundt, chief projects officer for the Michigan Economic Development Corp., the state’s investment arm, said he spent relatively little time worrying about geopolitics. His team conducted due diligence, got comfortable with the proposed gigafactories and the companies behind them, and went for the deals in fierce competition with several other states. Of one of the deals—for a $2.4 billion electrode plant to be built by the American subsidiary of Chinese battery developer Gotion High-Tech—Hundt said, “If it hadn’t moved forward in Michigan, it would have moved forward somewhere else in the United States.”

The $250 billion battery development effort approved by Congress is colliding with the priorities of state and local officials and battery and auto makers. Sen. Joe Manchin (D-W.Va.), whose staff wrote key portions of the IRA, has made it clear that he wants a U.S.-based battery industry without Chinese participation. But officials in states like Michigan want to create middle-class jobs, and companies like Ford want to assure supplies of batteries for the millions of EVs they hope to sell this decade.