WASHINGTON (AP) – The Biden administration has canceled plans to award a $200 million grant to a U.S. battery maker after Republican lawmakers criticized the company’s alleged ties to China.
Texas-based Microvast was one of 20 companies to receive preliminary grants totaling $2.8 billion to boost domestic production of electric vehicle batteries. The company is building a battery plant in Tennessee and is negotiating with the Department of Energy for a $200 million grant funded by the 2021 Infrastructure Act.
A spokeswoman for Energy Secretary Jennifer Granholm confirmed on Tuesday that negotiations with Microvast had been broken off, but gave no specific reason.
The Department of Energy said in a statement that it “enforces a rigorous review process before releasing any funds awarded, and it is not uncommon for companies selected to participate in procurement negotiations” to ultimately be denied a federal grant.
“The Ministry can confirm that it has decided to break off negotiations and not to provide funds to Microvast from this competitive funding opportunity,” spokeswoman Charisma Troiano said.
The company did not immediately respond to a request for comment.
Republicans and Democrats praised the department’s decision.
“This is a win for taxpayers and American businesses,” Frank Lucas, chairman of the Oklahoma House Science Committee, said in a statement. “Under no circumstances should our taxpayers’ money finance a company that has close ties to the Chinese Communist Party. These funds are aimed at strengthening America’s battery manufacturing and supply chain, not at tightening China’s stranglehold on those supplies.”
Lucas and other Republicans said they were frustrated that it took more than six months for the Biden administration to “come to such an obvious conclusion.” Lucas and other Republican lawmakers have repeatedly complained about Microvast’s ties to what they call the Chinese Communist Party.
New Jersey Rep. Frank Pallone, the top Democrat on the House Energy and Commerce Committee, said the decision to revoke the grant “shows that the DOE takes its management of taxpayers’ money very seriously.”
At a Senate Energy Committee hearing in February, Sen. John Barrasso, R-Wyo., questioned whether the proposed grant to Microvast would benefit China. Barrasso cited a company filing with the Securities and Exchange Commission in which Microvast said it may not be able to protect its intellectual property rights in China.
China often requires foreign companies to work with Chinese companies to operate in the country.
In a May 1 letter to Granholm, Barrasso said Microvast’s CEO had “bragged to the Chinese media about Microvast’s close ties with the People’s Republic of China.”
The infrastructure bill of 2021 “was supposed to develop robust domestic manufacturing bases and supply chains for electric vehicles and other clean energy,” Barrasso said. “The DOE’s distribution of $200 million in taxpayers’ money to a company closely linked to China” would be “demonstrably contrary to the intention of the bipartisan infrastructure law,” he added.
Barrasso called the Microvast grant an example of “Solyndra Syndrome,” referring to an Obama-era program that paid more than $500 million in loan guarantees to failed solar company Solyndra. He and other Republicans said both cases showed poor scrutiny by Democratic governments.
The lending program was largely dormant under President Donald Trump but was revived by President Joe Biden. It differs from infrastructure law funding, which has been conditionally awarded to Microvast and other companies.
The grants, announced in October, were intended to help U.S. companies extract and process lithium, graphite and other battery materials. The Biden administration is trying to boost production and sales of electric vehicles as a key part of Biden’s strategy to slow climate change and expand US manufacturing.
“This is critical because the future of vehicles is electric,” Biden said at a White House event last year. The Department of Energy grants — along with other spending authorized in the 2022 Climate Change Act — are an attempt to “make sure we get back into it big[in battery production],” Biden said.