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Energy Department rejects $200 million in grants to battery maker after GOP criticism over alleged ties to China

WASHINGTON (AP) – The Biden administration has canceled plans to give a $200 million grant to a U.S. 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 preliminary grants totaling $2.8 billion to boost domestic production of batteries for electric vehicles. The company is building a battery plant in Tennessee and was in talks with the Department of Energy about a $200 million grant financed through the Infrastructure Act from 2021.

A spokeswoman for Energy Minister Jennifer Granholm confirmed on Tuesday that negotiations with Microvast had been cancelled, but did not give a specific reason.

The Energy Department said in a statement that it “maintains a rigorous review process prior to the release of any awarded funds, and it is not unusual for entities selected to participate in award negotiations”[ads1]; to ultimately be denied a federal grant.

“The department can confirm that it has chosen to cancel negotiations and not award Microvast funds from this competitive funding opportunity,” spokeswoman Charisma Troiano said.

The company did not immediately return a request for comment.

Republicans and Democrats praised the department’s decision.

“This is a win for taxpayers and American businesses,” House Science Committee Chairman Frank Lucas, R-Oklahoma, said in a statement. “Our tax dollars should in no way fund a company with significant ties to the Chinese Communist Party. These funds are intended to strengthen America’s battery production and supply chain, not to tighten 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 GOP lawmakers have repeatedly complained about what they call Microvast’s links to the Chinese Communist Party.

New Jersey Rep. Frank Pallone, the top Democrat on the House Energy and Commerce Committee, said the decision to withdraw the grant “demonstrates that DOE takes stewardship of taxpayer money very seriously.”

At a Senate Energy Committee hearing in February, Sen. John Barrasso, R-Wyo., questioned whether the planned subsidy 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 cooperate with Chinese businesses in order to operate in the country.

In a May 1 letter to Granholm, Barrasso said Microvast’s CEO had “bragged to Chinese media about Microvast’s strong ties to the People’s Republic of China.”

The Infrastructure Act from 2021 “was apparently intended to develop robust domestic manufacturing bases and supply chains” for electric vehicles and other clean energy, Barrasso said. “DOE’s handing out $200 million in taxpayer funds to a company that has aligned itself with China” would be “demonstrably contrary to the intent of the bipartisan infrastructure bill,” he added.

Barrasso called the Microvast grant an example of the “Solyndra syndrome,” a reference to an Obama-era program that paid out more than $500 million in loan guarantees to the failed solar company Solyndra. He and other Republicans said both cases showed poor oversight by Democratic administrations.

The loan program largely went dormant under President Donald Trump, but has been revived by President Joe Biden. It is separate from Infrastructure Act funding that was conditionally awarded to Microvast and other companies.

Grants announced in October were intended to help US companies extract and process lithium, graphite and other battery materials. The Biden administration is seeking to increase production and sales of electric vehicles as a key part of Biden’s strategy to slow climate change and build American manufacturing.

“This is critically important, because the future of vehicles is electric,” Biden said at a White House event last year. The Ministry of Energy provides – together with other expenses approved in the 2022 Climate Act — is a bid “to make sure we’re back in the (battery manufacturing) game in a big way,” Biden said.

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