The Biden administration canceled plans for a $200 million grant to a US battery maker amid criticism from Republican lawmakers over the company’s alleged ties to China.
Texas-based Microvast was one of 20 companies to win seed grants totaling $2.8 billion to boost domestic battery manufacturing. for electric cars. The company is building a battery plant in Tennessee and was in talks with the Department of Energy for a $200 million grant. Funded through the Infrastructure Act of 2021.
A spokeswoman for Energy Secretary Jennifer Granholm on Tuesday confirmed the cancellation of negotiations with Microfast, but did not provide a specific reason.
The DOE said in a statement that it “maintains a rigorous review process prior to releasing any awarded funds, and it is not uncommon for entities selected to participate in grant negotiations” to eventually reject a federal grant.
“The Department can confirm that it chose to cancel negotiations and not award Microvast funds from this competitive funding opportunity,” said Charisma Troiano, a spokeswoman for the department.
The company did not immediately respond to a request for comment.
Republicans and Democrats applauded the department’s decision.
“This is a win-win for American taxpayers and corporations,” House Science Committee Chairman Frank Lucas said in a statement. “In no way should our tax money fund a company with strong ties to the Chinese Communist Party. This money is intended to boost battery production and supply chain in America, not to tighten the Chinese stranglehold on these supplies.
Lucas and other Republicans said they were frustrated that it took the Biden administration more than six months to “come to such a clear conclusion.” Lucas and other GOP lawmakers have repeatedly complained about what they call Microfast’s ties to the Chinese Communist Party.
New Jersey rep. Frank Pallone, the top Democrat on the House Energy and Commerce Committee, said the decision to rescind the grant “shows that the Department of Energy takes its oversight of taxpayer money very seriously.”
At a Senate Energy Committee hearing in February, Sen. John Barrasso, R-Wiyu, questioned whether the planned grant to Microvast would benefit China. Barrasso cited a company filing with the Securities and Exchange Commission where Microfast said it might not be able to protect its intellectual property rights in China.
China often requires foreign companies to partner with Chinese companies in order to operate in the country.
In a May 1 letter to Granholm, Barrasso said the Microfast CEO “bragged to Chinese media about Microfast’s strong ties to the People’s Republic of China.”
Infrastructure Act of 2021 “It was ostensibly to develop strong domestic manufacturing bases and supply chains” for electric cars and other clean energy, Barrasso said. He added, “A DOE distributing $200 million in taxpayer money to a company joined at the hip with China” would be “a clear contradiction of the intent of the bipartisan Infrastructure Act.”
Barrasso called the Microvast grant an example of the “Solyndra syndrome,” referring to an Obama-era program that paid out more than $500 million in loan guarantees to the failed Solyndra solar power company. He and other Republicans said both cases showed poor scrutiny by Democratic administrations.
The loan program has largely stalled under President Donald Trump, but President Joe Biden has revived it. It is separate from Infrastructure Act funding conditionally awarded to Microvast and other companies.
The grants announced in October were intended to help US companies extract and process lithium, graphite and other battery materials. The Biden administration seeks to boost production and sales of electric vehicles as a key part of Biden’s strategy to slow climate change and build up manufacturing in the United States.
“This is very important, because the future of cars is electric,” Biden said at a White House event last year. The Department of Energy grants—along with other expenditures approved in the Climate Act of 2022 — is an effort to “make sure we get back in the (battery production) game in a big way,” Biden said.
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