A source familiar with the situation said on Monday that the U.S. Energy Department informed Microvast Holdings, a manufacturer of lithium batteries, that it would not be giving it a $200 million grant because of concerns raised by lawmakers regarding the company's apparent ties to the Chinese government.
The department had engaged in discussions with Microvast regarding the grant aimed at facilitating the construction of a plant in Tennessee. The grant originated from the bipartisan infrastructure law of 2021, which allocated a substantial $1 trillion.
In a letter addressed to Energy Secretary Jennifer Granholm last December, two Republican lawmakers voiced their disapproval of the funding decision, expressing concerns about Microvast's alleged connections to the Chinese Communist Party (CCP). They emphasized that these ties raised significant apprehensions regarding the department's capacity to safeguard U.S. taxpayer dollars.
According to Republican Representative Frank Lucas, the cancellation of the grant is considered a victory for both taxpayers and American businesses.
In his statement, Representative Frank Lucas underscored that the allocated funds were intended to fortify the battery production and supply chain within the United States. He emphasized that the objective was to strengthen America's position in these areas, rather than allowing China to tighten its stranglehold on these crucial supplies.
The company's purported connections to the Chinese government have not been further described by the MPs.
A request for comment was not immediately answered by Texas-based Microvast. Manufacturing facilities for the corporation are located in Tennessee, Germany, and China.
The insider declined to comment on whether worries about relations with China played any role in the decision to call off the negotiations. According to the source, contract decisions are based on a company's historical performance, financial management, and accounting practices.
According to a spokesperson, the Energy Department follows a meticulous review process before disbursing awarded funds, and it is not uncommon for selected entities engaged in award negotiations to ultimately not receive the funds.
The award was intended to aid in the development of specialist EV battery separator technology and the construction of a new separator facility by General Motors (GM.N) and Microvast. Hundreds of employment were anticipated to be generated by the initiatives.
A request for comment from GM did not immediately receive a response.
The award was contrary to the goals of the infrastructure law, wrote Senator John Barrasso, the top Republican on the Senate energy committee, in a letter to Granholm.
In his remarks on Monday, Barrasso called upon the Biden administration, led by President Joe Biden, a Democrat, to undertake a comprehensive revamp of its grant making process. He emphasized the importance of conducting thorough due diligence before issuing press releases regarding grants.