US House Panel Investigates Treasury’s Tax Credits for Chinese Firms
A U.S. House panel on China has reached out to the Department of Treasury, seeking clarification on whether it would support U.S. taxpayer funding for a Chinese green energy company’s battery plant in Michigan.
The panel’s inquiry comes as the Treasury develops guidelines for applying the term “foreign entity of concern” to incentives under the Inflation Reduction Act (IRA), a new law aimed at reducing U.S. reliance on China for renewable energy.
The chair and ranking member of the House Select Committee on the Chinese Communist Party (CCP) expressed their concerns in a letter to the Treasury, stating that it is puzzling for the U.S. government to support CCP-backed companies expanding their presence in the U.S. market, particularly in critical sectors like lithium-ion battery manufacturing. They emphasized the need to reduce the CCP’s control over vital supply chains.
The Committee’s focus is on Gotion High-Tech Co., whose U.S. subsidiary Gotion Inc. is constructing a $2.4 billion battery manufacturing facility in Michigan. The facility will begin production in the second quarter of 2025 and will have a capacity of producing 30 to 40 gigawatt-hours of battery cells per year. Chuck Thelen, Gotion’s vice president of North America operations, shared this information at a local government meeting in April.
Gotion is a leading producer of lithium-iron-phosphate (LFP) batteries, which are more affordable but less energy-dense compared to the dominant nickel-cobalt-manganese (NCM) batteries in the market. LFP battery technology is monopolized by Chinese companies, while nickel-based batteries are championed by Japanese and South Korean companies.A Race for Market Domination
South Korea’s SNE Research ranks Gotion third globally in terms of market share for LFP cathode battery materials and eighth in installed battery volumes for electric vehicles (EVs). The research firm refers to Gotion as Guoxuan, its Chinese name, in its reports.
Recently, Gotion disclosed a second location in Manteno, Illinois, where it has invested $2 billion to manufacture LFP batteries on a 150-acre site. This announcement follows the earlier mention by Mr. Thelen in April.In February, Ford Motor Co. revealed that it had licensed LFP battery technology from China’s Contemporary Amperex Technology Co. Ltd. (CATL), the world’s largest EV battery maker. Ford plans to produce 35 gigawatt-hours of batteries annually, enough for 400,000 EVs, starting in 2026.
The adoption of LFP batteries by American automakers is crucial for LFP technology to dominate the global EV battery market, according to a December report by Adamas Intelligence, a critical minerals market research firm.The bipartisan panel leaders also called for the Treasury’s input to expand the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS), which reviews foreign acquisitions for national security risks. They emphasized the need to strengthen national security reviews.CFIUS, under the Treasury’s leadership, determined that Gotion’s purchase of land for the Michigan battery plant did not fall under its jurisdiction as a “covered transaction,” according to an announcement by the company in June.
In addition to potential federal tax credits, Gotion has received a generous state and local incentive package.
In April, the state of Michigan approved a $715 million incentive package, including a 30-year tax break worth $540 million, for Gotion’s new battery plant, as reported by MLive.Gotion’s Link to the CCP
Gotion’s connection to the CCP has recently come under scrutiny. The Chinese parent company’s article of incorporation includes chapters on establishing a CCP committee within the company, with the Party secretary serving as the chairman.
During the local government meeting in April, Mr. Thelen stated, “We do have articles of incorporation that require specific paragraphs, or you don’t do business in the country of China. Yes, but it is not a corporate culture.”
However, reports on Gotion’s Chinese website seem to tell a different story.
In its 2022 corporate responsibility report, Gotion stated that it has 923 CCP members and 11 chapters dedicated to CCP-related activities, including visits to historical Red Army battlefields and studying reports of the 20th National Congress of the CCP.In April, Gotion Inc. was registered as a foreign principal under the Foreign Agents Registration Act, according to a filing (pdf) by a law firm. This raises further questions about Gotion’s ties to the CCP.When Gotion announced the Michigan plant, it mentioned collaborating with Ferris State University to develop a talent pipeline for the 2,360 jobs it plans to create. It also expressed intentions to prioritize hiring within the state through Michigan Works.
Regarding the recruitment progress, Michigan Works stated that there is no information to report at this time. The dean of Ferris State’s engineering school, at the time of the Gotion deal announcement, has left the university. The status of the planned educational partnership remains unclear. Gotion’s Mr. Thelen did not respond to inquiries from The Epoch Times.
The Epoch Times has reached out to the Department of Treasury for comment.
Why do critics argue that investing in companies tied to the CCP poses national security risks
Target=”_blank” rel=”noopener”>website states that its largest shareholder is State Grid Corporation of China (SGCC), a state-owned enterprise and one of the largest utilities in the world. The SGCC is directly controlled by the CCP and plays a key role in implementing the party’s energy policies.
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